Balance Sheet Have Beneficial to the Owner, the State of As the Acceptance That in Certain Given Credibility and Flexibility

Home , Patria (company), Rautaruukki, Sampo Group, Solidium, Stora Enso

FOR FINNISH OWNERSHIP

ANNUAL REPORT

Contents

Solidium Corporate governance

2 Solidium in brief 34 Board of Directors 3 Chairman of the Board’s review 36 Personnel 4 Managing Director’s review 38 Corporate governance 6 Solidium’s mission and operation 42 Corporate responsibility

Holdings Financial reporting

8 Solidium’s investments 45 Report of the Board of Directors 10 Impact on society 48 Financial statements 12 Elisa 55 Audit report 14 Kemira 56 Sources and comments 16 Metso 18 Outokumpu 20 Rautaruukki 22 Sampo 24 Sponda 26 Stora Enso 28 TeliaSonera 30 Tieto 32 Tikkurila

NET ASSET VALUE

Eur 7 715 Million RECEIVED PROFIT DISTRIBUTION

Eur 458 Million PORTFOLIO YIELD

35 % | ANNUAL REPORT 2010

Solidium in brief

Solidium is a holding company that is Rautaruukki Corporation, Sampo plc, Key issues in Solidium’s financial year wholly-owned by the State of Finland. Stora Enso Oyj, Sponda Plc, TeliaSonera 2009–2010 were: Its mission is to strengthen and stabilise AB, Tieto Corporation and Tikkurila Oyj), Finnish ownership in nationally important in all of which Solidium has a minority • Portfolio yield was 34.6 per cent companies and to increase the financial holding. • Market value of equity investments value of its holdings in the long term. Solidium is the largest or one of at the end of the report period was Solidium bases its investments on the largest owners in its portfolio com- EUR 7,914 million financial analysis. The effective manage- panies. As a long-term owner Solidium, • Cash dividends and capital repay- ment of the company’s current invest- in collaboration with the other owners, ments received by Solidium totalled ments and increasing their value form aims at enhancing value creation in the EUR 356 million the core target of Solidium’s investment companies by being an active owner. • Solidium’s Board of Directors strategy. At the end of the report Solidium exercises its influence as an proposes EUR 356 million dividend period, Solidium’s equity portfolio active owner in participating in the distribution comprised eleven listed companies selection of board members and in the • Solidium’s Board of Directors (Elisa Corporation, Kemira Oyj, preparation of share issues and other confirmed Solidium’s values and Metso Corporation, Outokumpu Oyj, significant mergers and acquisitions, strategy which require shareholder support. • Solidium agreed financing arrangements involving a total of EUR 600 million • New portfolio companies: Tieto Corporation and Tikkurila Oyj • Solidium has representation on the nomination committees of seven portfolio companies Solidium’s mission is to strengthen and stabilise Finnish ownership in nationally MISSION important companies and to increase the value of its holdings in the long term

Solidium’s vision is to be an owner, whose professionalism, governance practice and value creation skills are widely recognised VISION

1. Professionalism 3. Accountability 2. Integrity and transparency 4. Proactivity VALUES

1. Increase cost-effectively the value of the holdings in the long term 2. In cooperation with other key shareholders develop the portfolio companies with a view to increase their value GOALS 3. Actively promote good governance and contribute to the development of the capital markets in Finland

1. Be a significant owner with sufficient influence to develop and execute owner value creation plans 2. Focus on a limited number of portfolio companies INVESTMENT STRATEGY 3. Portfolio allocations will be developed in accordance with Solidium’s mission, taking market conditions into consideration

1. Nationally significant listed companies and companies in important industries preparing for a listing SOLIDIUM 2. Minority ownership that is significant enough to secure INVESTMENT CRITERIA IN A NUTSHELL sufficient influence 3. Value creation potential through active ownership 4 Long investment horizon

The received dividend income after deduction of operating expenses is, as a general rule, distributed to the owner. DIVIDEND POLICY

2 CHAIRMAN OF THE BOARD'S REVIEW

Operating capacity established

The past financial year was Solidium’s first full year of operation. that we may sell, end up in a “good The year was busy and included everything that was expected, consis- home”. ting, however, also of some unexpected challenges. As a result of the Our compensation systems naturally global economic recession, our operating environment was changed complies with the guidelines issued by dramatically from that prevailing at the time of the decision to estab- Government. Accordingly, when establish Solidium. Companies were abruptly forced to swap their growth lishing an organisation the objective is strategies for short-term survival measures. In the new scenario a high-quality expert organisation which Solidium adopted a clear-cut operating policy. Our role as a blue-and- is paid an appropriate and competitive white holding company meant that we would provide support for our overall compensation, and this is what portfolio companies through the hard times. we have done. The role of anchor owner confers special responsibilities on Solidium. We The cornerstones of any newly launched ”We want to observe want to be an accountable, demanding company are a clear mission statement and cooperative owner. A demanding and the establishment of the core good governance owner wants to keep the company’s organisation. In the course of the first earning capacity at as good a level as financial year, Solidium’s organisation practice in our possible today and into the future. This reached a high level of operating capa- is also evidence of real accountability. city. From day one, the company has operations, while Solidium is a significant owner, but only had the benefit of a Board of Directors one of many. We want to observe good with a diverse range of competence and maintaining a good governance practice in our operation, experience. The discussions have been while maintaining a good level of open and challenging in style, promo- level of cooperation.” cooperation with the other owners. ting constructive outcomes. I have also The cooperation between us and our been pleased to note that Solidium’s approach to issues as well as to our portfolio companies and the other Board of Directors is united in a strong compensation systems. The nature of shareholders has got off to a good start. sense of commitment to our cause. our mission must be emphasised when As our operating capacity has now The year saw the creation of effective considering our operations. Our role of been solidly established , I view the control and supervision systems. The blue-and-white anchor owner carries future with confidence. Economic vola- objective with regard to the operational with it a long-term responsibility. We tility will continue. The current environ- organisation was the creation of a top- are not a short-term player, although ment requires us to be wise, patient and quality, yet compact team of experts, we can be nimble when required. Our nimble. I believe that Solidium will which is capable of sufficiently in-depth strategy lays down the direction of any manage its mission in line with the high analysis in diverse sectors. Accountable change in our current holdings. Just as expectations. decisions require thorough, objective in the past financial period, we see and dispassionate analysis. In its annual future changes in holdings in the form Keijo Suila evaluation, Solidium’s Board of Direc- of additional investment and sell Chairman of the Board tors has given this work high marks. downs, as well as entirely new names During the year, our agenda has in our portfolio. We base our decisions included several projects, some of them on thorough analyses, with primary very significant in terms of size. The focus on financial considerations, as young organisation has taken charge of dictated by our mission, but always these projects and managed them well. within sight of the national interest. Only a few of the projects have been in Consequently, new invesments have the public eye. However, in the decision- a long time span. When exiting making process the “no” decisions from a holding, we naturally require just as thorough a preparation require a financially feasible and consideration as a positive solution, i.e. a “good price”. response. Part of the disposal On the whole, Solidium’s activities process is to facilitate have elicited positive external feedback. for that the shares Critical comments have related alter- nately to our active or allegedly inactive

3 | ANNUAL REPORT 2010

First full operating year

Solidium was established with the aim development of the portfolio companies of creating a coherent, transparent blue- as well as new investments. It is our ”After a full year of and-white operator with long-term intention to maintain Solidium’s finance operation, Solidium goals, whose decision-making process reserves at a level to allow this. In is based on a professional approach. autumn 2009, Solidium concluded an has proved to be Solidium has an independent and auto- agreement on availabe senior financing nomous Board of Directors, which acts totalling EUR 600 million, allowing robust in structure” within the framework of Government the company to make rapid investment guidelines. From its first year of opera- decisions, where required. The correct time span for evaluating tion, Solidium has acted consistently In the first full operating year, Solidium’s financial result is over the in line with the aforementioned model. Solidium has focused on defining in cycle. It has participated actively in the share more detail its national mission. The past year has seen both issues of its portfolio companies and Solidium’s blue-and-white mission and projects involving current holdings and also made a new investment in Tieto the values, goals and strategies dictated the analysis of potential new invest- Corporation. The decision-making by it are laid out on page 2 of the annual ment targets. Only a fraction of the process, which was defined at Solidium’s report. We believe that Solidium’s work done at Solidium is visible to inception, has been transparent and accountable and professional operation the public. Despite this, the work to effective. will in the long term lead to a good consider projects always consists of Solidium’s limited liability company result and, through dividends, be far-reaching preparatory work as well status and own balance sheet have beneficial to the owner, the State of as the acceptance that in certain given credibility and flexibility. A large Finland. circumstances projects will have to balance sheet is an asset in itself, since In the financial period just ended, be rejected. it enables access to sufficient additional Solidium’s holdings generated a yield The most important channels for funding should it be required; this in of 34.6 per cent and the value of our Solidium to incfluence as a shareholder turn, paves the way for considerable equity investments grew from EUR 6.0 are contacts with the boards of the billion to EUR 7.9 billion. This represents portfolio companies and participation a good result for our owner, but one in the work of their nomination year is too short a time span on which committees alongside other share- to base an evaluation of our operation. holders. In our view, there remains room for improvement in the composition, working procedures and supervision of company boards, and Solidium intends to be an active participant in this development. One of our targets in this respect is to increase the diversity and sector-specific competence of board

4 MANAGING DIRECTOR'S REVIEW

members. Although market forces general meeting concerning boards of the companies were forced to carry out require that companies are effective directors and their composition. This is drastic efficiency measures in the eco- in their operation, at the board level justified in the case of companies with a nomic recession. The speedy adjustment systematic development is lacking. One different ownership structure or history. measures proved that Darwinism in of the most important future issues for The Corporate Governance Code should economics works, because the compa- consideration is the way in which share- have a steering function, rather than a nies will recover from the recession in holders could act as catalysts in the restrictive one. For Solidium the most different ways to meet the next twists development of company boards to significant change in the code was the and turns in the economy. In the current keep pace with the progress of the introduction into the general Finnish financial period, a core task on the shareholders’ own processes. system of a model of nomination agenda will be to identify the post- At the same time as the composi- committee, whereby the committee recession winners and to support their tion and operation of the boards of members comprise shareholders of growth strategies. directors are improved, various means the company. The model is effective in I would like to thank the owner for must be deployed to ensure that remu- companies where some of the share- its positive support of our activities and neration is appropriately measured. holders are anchor owners and commit- the personnel for the good operating Solidium had a key role in ensuring that ted to the success of the company. The year. I am sure that in the next few in the spring an increasing number of model increases transparency and on years we and the other shareholders, companies decided to pay a part of the the other hand encourages the owner in cooperation, will face new challenges board members’ remuneration in shares. to adopt a long-term and professional and encounter new opportunities in our It is important that both the manage- approach to the operation. Solidium work in the vanguard of Finnish owner- ment and the board members hold complies with the new Corporate ship. We have full confidence in Solidium’s shares in the company. Long-term remu- Governance Code in all activities that ability to meet these challenges. neration schemes, in particular, should are linked to holdings and it supports adopt this model in the future. the efforts to include all listed companies Kari A.J. Järvinen As a key owner of some of the within the sphere of the code. Managing Director largest listed companies in Finland, Hundreds of thousands of workers Solidium is in a unique position to view and shareholders have an interest in the operation of the boards of these Solidium’s holdings. The impact our companies. In the last financial period, holdings remained extensive, although Solidium took part in reforming the Corporate Governance Code of the Securities Market Association by com- menting on proposals and bringing forth its own views. The new code allows different methods to be adopted to prepare proposals to the shareholders’

WHY INVEST IN TIETO COrpOrATION? • Solidium believes that Tieto is a good investment in the long term • Tieto plays a central role in information technology services in the Nordic countries • Tieto is a clear market leader in the Finnish information technology market with its market share of around 25 per cent • Tieto, with its workforce numbering around 5,800 employees, is the biggest employer by far in the Finnish information technology sector and it represents the biggest IT skills cluster in Finland • Finnish anchor ownership is well justified in Tieto • The company is well-positioned for profitable growth in its strategic growth areas

5 | ANNUAL REPORT 2010

Solidium’s mission and operation

GENErAL portfolio and the growth of its value. ACTIVE OWNErSHIp Solidium is a limited liability company Solidium’s investment yield target is to Solidium is the largest or one of the that is wholly-owned by the State of increase cost-effectively the value of its largest owners in the portfolio compa- Finland. Its mission is to strengthen and equity investments in the long term, nies, remaining, however, a minority stabilise Finnish ownership in nationally using as benchmarks the OMX Hki Cap shareholder in all of the companies. important companies and to increase index and the risk-adjusted return of Solidium’s role in its portfolio compa- the value of its holdings in the long long-term government bonds. nies is that of an active owner, and it term. Solidium’s articles of association Solidium analyses potential new aims to exercise its influence in any state that the company’s field of opera- portfolio companies in accordance with matters available to it as an owner. tions comprises ownership and manage- several different investment criteria, the As part of active ownership, ment of shares in companies operating key criteria being: Solidium cerates an owner’s strategy in Finland and the exercise of sharehol- • the investment yield target set for for each of the portfolio companies. ders’ rights in them. In its activities, the portfolio company This requires in-depth understanding Solidium complies with the general • the investment is justified on of the companies’ business, operating principles of ownership steering, as national interests environment, competitive circumstances confirmed by Government. • possibities to exercise shareholder and financial standing as well as active The company invests in companies influence are available interaction between Solidium’s portfolio that are considered to be of national • the size of the investment is companies and the other shareholders. importance. Solidium may invest in meaningful incramental to The creation of an owner’s strategy Finnish listed companies, foreign listed Solidium’s portfolio. provides Solidium with a view of the companies with extensive operations in portfolio companies’ capital require- Finland and also in companies that are Solidium’s investments do not incor- ments and important strategic and preparing for a listing. The Cabinet porate industrial policy factors or an aid structural issues. Furthermore, the Committee on Economic Policy has dimension or factors that might distort owner’s strategy forms the basis for determined the authority of the Board competition. Solidium does not invest in disposal or purchase of shares in the of Directors of Solidium, and the board companies whose activities could be portfolio companies or subscription for operates independently within the construed to be unethical or whose new shares in any share issues. It also defined framework. financial status or ownership structure contributes to Solidium’s views on does not support investment. Solidium’s reorganisation measures in the compa- SOLIDIUM’S INVESTMENTS corporate responsibility is described in nies, when shareholders’ views are Solidium’s investment activities are more detail on pages 42–43. sought. based on financial analysis and their Solidium may exit from its holding An important means of influence objective is to increase shareholder or reduce its holding in any portfolio in active ownership is participating in value in the long term. Solidium is a company, if there are good economic the selection of board members. In long-term investor in its portfolio com- reasons for the exit or reduction and most of Solidium’s portfolio companies, panies. Solidium applies measures that the market circumstances are favour- Solidium’s representatives participate in are available to an active owner, in order able. Solidium may similarly exit from, evaluating the work of board members to promote the further development or reduce its holding in, a protfolio and in preparing proposals to the share- and growth of the companies in which company, if Solidium’s mission as a holders’ general meeting concerning it has a holding, and to enhance value Finnish anchor-owner in the company board members and their remuneration. creation. has been fulfilled or if it can be fulfilled Solidium’s representatives are heard The basis and core objective of with a smaller holding. either in connection with nomination Solidium’s investment strategy is the good committees, consisting of shareholders, management of the current investment or in other connections.

6 SOLIDIUM'S MISSION AND OPERATION

SOLDIUM’S pArTICIpATION consisting of shareholders or their meeting approves the principles of good IN THE WOrK OF THE NOMINATION representatives, for the purpose of governance practice to be applied by COMMITTEES, 2009–2010 preparing for the selection of board Solidium in its role as a shareholder of members does not constitute a departure listed companies. Kemira Kari Järvinen, member from the code. The Swedish corporate Metso Kari Järvinen, chairman governance code applying to listed FINANCIAL YEAr 2009–2010

Outokumpu Kari Järvinen, chairman companies was also updated on Solidium’s representatives took part in 1 February 2010. The new code takes the preparation of proposals concerning Rautaruukki Kari Järvinen, chairman into account the remuneration recom- the board members and their remunera- Sponda Kari Järvinen, chairman mendation issued by the European tions in the nomination committees of Stora Enso Keijo Suila, chairman Commission on 30 April 2009 as well seven of its portfolio companies. In

TeliaSonera Kari Järvinen, member as certain amendments to the Swedish spring 2010, a total of 13 new members legislation governing limited liability were elected to the boards of Solidium’s companies. portfolio companies (excluding Tieto Elisa and Sampo have a nomination committee consisting of board members. Solidium became The new corporate governance codes and Tikkurila, in which Solidium a shareholder in Tieto and Tikkurila in spring promote transparency and harmony in acquired shareholdings following the 2010. the disclosure of remuneration in listed appointments of the boards). Of the Key considerations when selecting companies. Furthermore, the new Finnish 13 new members, five (approximately board members include the company’s governance code increases flexibility 38 per cent) were women. development needs and the aim to in the preparation of the appointment In all of Solidium’s portfolio compa- create an effective Board of Directors, of listed companies’ board members. nies, excluding Tieto, the board members’ whose members have complementary, Following the reform, all Solidium’s remuneration in 2010 is paid as a combi- diverse skills and experience. portfolio companies comply with the nation of the companies’ own shares Board members’ selection criteria applicable corporate governance code. and cash. It is Solidium’s view that include professional competence and Solidium applies the following prin- increased and long-term shareholding skill as well as experience, commitment, ciples in the corporate governance of its by board members serves to align the impartiality and the opportunity to portfolio companies: interests of the shareholders and board devote sufficient time to the board • Solidium applies corporate gover- members and consequently serves the work. nance principles based on the interests of all the share holders. mutual equality of the owners Solidium used its full subscription GOVErNANCE IN SOLIDIUM’S • Solidium acts in cooperation with entitlement in Kemira’s rights issue, pOrTFOLIO COMpANIES other significant owners as well as subscribing for the new Kemira shares Solidium aims to promote good gover- the boards and operational manage- with approximately EUR 35 million. In nance practice in its portfolio companies. ment of its portfolio companies connection with the issue, Solidium also The companies are governed in line with • Solidium has an active influence on gave an underwriting commitment and the provisions of the Companies Act, the board selections of its portfolio guarantee. As shareholder Solidium had the Securities Markets Act, other legis- companies and on other matters an active role in supporting the spin-off lation, the Finnish Corporate Gover- pertaining to owners and it monitors of Tikkurila from Kemira. nance Code applying to Finnish listed actively the operational development Solidium purchased in a “on-market” companies as well as best practices of its portfolio companies operation 10.3 per cent of Tieto’s share applying to the securities markets. • Solidium does not, in its role as capital, paying approximately EUR 116 On 15 June 2010 the Finnish Securities owner, violate good governance million and becoming Tieto’s largest Market Association published a new practice by intervening in the deci- shareholder. Tieto is a major Nordic governance code for listed companies. sion-making process of the boards service provider, and the holding is very Solidium was involved in the code or the operational management of well in-line with Solidium’s owner inte- reform process by supplying oral and the portfolio companies rests. In Solidium’s view the company is written comments on the proposals. • Solidium discusses with other sig- in a good position to achieve profitable The new Corporate Governance Code nificant owners key issues relating growth in its strategic growth areas. takes into account the remuneration to business strategy and structural Solidium believes that Tieto is a finan- recommendation issued by the Euro- arrangements. cially good investment target in the pean Commission on 30 April 2009. long term. Another change to the code states Solidium’s articles of association that establishing a nomination board, determine that the annual general

7 | ANNUAL REPORT 2010 Solidium’s investments

INVESTMENT YIELD year at near the same levels as at the million was in cash dividends, EUR 57 The yield of Solidium’s equity invest- start of the year. million in capital repayments and EUR ments was 35.1 per cent in the financial 102 million in dividends in the form of year and 3.6 per cent in the first half of HELSINKI STOCK EXCHANGE Tikkurila shares. This means that the 2010. Kemira and Metso brought in the On 30 June 2010, the Helsinki Stock cash distribution totalled EUR 356 best return on equities in the 12 month Exchange had a market value of EUR million. financial period. The value of the equity 136 billion. Twelve months earlier, the The largest profit distributions were investments grew by EUR 1,919 million, market value had been EUR 121 billion, received from TeliaSonera (EUR 142 from EUR 5,995 million to EUR 7,914 translating to a rise in the financial year million), Kemira (EUR 109 million, incl. million. of 12.4 per cent. The weight-capped Tikkurila shares) and Sampo (EUR 79 Solidium’s total portfolio (equity OMX Helsinki Cap yield index rose in million). and money market investments) gene- the financial year by 31.8 per cent. Solidium was established by rated a return of 34.6 per cent in the As the market value of the Helsinki demerger on 1 May 2009. The shares financial year and 3,8 per cent in the Stock Exchange was EUR 141 billion at which were transferred to Solidium in first half of 2010. Solidium’s net asset the beginning of 2010, market values the demerger received a profit distribu- value increased by 28 per cent, from have decreased by 3.5 per cent in the tion of EUR 285 million in the first half EUR 6,042 million to EUR 7,715 million. first half of the year. In the same period, of 2009. the OMX Helsinki Cap yield index rose CApITAL MArKETS by 5.0 per cent. INCOME FROM PROFIT DISTRIBUTIONS The stock markets started to recover IN THE PERIOD 1.7.2009–30.6.2010 EUR million in the first months of 2009 and the SOLIDIUM’S HOLDINGS upturn continued until early spring At the end of the financial year, TeliaSonera 141.9 2010. On average, growth in the equity Solidium’s equity portfolio contained Sampo 79.3 market in Finland outstripped that of shares of eleven listed companies. Stora Enso 38.8 the rest of Europe. Although the global The equity investments’ market value Rautaruukki 25.0 economy is showing signs of recovery, amounted to EUR 7,914 million on Elisa 22.0 several uncertainties continue to influ- 30 June 2010, the biggest holdings by Outokumpu 19.8 ence economic development and this market value being TeliaSonera, Sampo Sponda 11.4 reflects on prices on stock exchanges. and Outokumpu. Metso 11.0 In spring 2010, national debt problems The profit distributions (dividends Kemira 7.0 increased volatility on the markets, and capital repayments) received by 0 30 60 90 120 150 causing heavy swings in prices, but Solidium from the companies in the Tieto and Tikkurila were not included in Solidium's share index values ended the financial financial year amounted to EUR 458 portfolio at the time of the proﬁt distribution. The graph does not include the Tikkurila shares million in aggregate, of which EUR 299 received as proﬁt distribution. CHANGES IN EQUITY pOrTFOLIO

Acquisition Cost of acquisition, Acquisitions Number of shares price/share, EUR EUR Kemira's rights issue, December 2009 5 239 587 6.60 34 581 274 Distribution of Tikkurila shares as dividend to Kemira shareholders, March 2010 6 474 021 15.80 102 289 532 Acquisition of shares in Tieto, spring 2010 7 415 418 15.58 115 560 419 Acquisitions, total 252 431 225

Disposals Number of shares Sale price/share, EUR Sale price, EUR Sale of Rautaruukki shares, June 2010 100 12.98 1 298

CAPITAL DEVELOPMENT 1.7.2009–30.6.2010 YIELD DEVELOPMENT 1.7.2009–30.6.2010 EUR million 9 000 150 8 000 140 7 000 6 000 130 5 000 120 4 000 110 3 000 100 2 000 1 000 90 0 80

31.1.2010 31.3.2010 31.5.2010 31.1.2010 31.3.2010 31.5.2010 30.6.200931.7.200931.8.200930.9.200931.10.200930.11.200931.12.2009 28.2.2010 30.4.2010 30.6.2010 30.6.200931.7.200931.8.200930.9.200931.10.200930.11.200931.12.2009 28.2.2010 30.4.2010 30.6.2010

8 SOLIDIUM'S INVESTMENTS

KEY INVESTMENT rATIOS AS AT 30.6.2010

1 month 6 months 12 months 2 years* Yield of total investments (incl. money market investments) 2.1 3.8 34.6 -1.9 Yield of equity investments, % 2.2 3.6 35.1 -1.5 Yield of benchmark index OMX CAP HKI, % -1.2 5.0 31.8 -2.9 Volatility, % 24.7 24.6 35.6 Sharpe 0.3 1.4 -0.1 Beta 1.0 1.0 Alfa, % 1.8 1.1 Tracking Error, % 7.2 9.3 Information ratio 0.4 0.1 * Annual figures given for key ratios of over 12 months

EQUITY HOLDINGS AS AT 30.6.2010

Number of Proportion shares held by Proportion of company’s of company’s Company Solidium total share capital votes Elisa 16 631 000 10,0% 10,0% Kemira 25 896 087 16,7% 16,7% Metso 15 695 287 10,4% 10,4% Outokumpu 56 440 597 30,9% 30,9% Rautaruukki 55 656 599 39,7% 39,7% Sampo A 79 280 080 14,1% 14,0% Sponda 95 163 745 34,3% 34,3% Stora Enso 97 079 438 12,3% 25,1% Stora Enso A* 55 595 937 31,4% 31,4% Stora Enso R* 41 483 501 6,8% 6,8% TeliaSonera 616 128 221 13,7% 13,7% Tieto 7 415 418 10,3% 10,3% Tikkurila 6 474 021 14,7% 14,7% * A proportion of total number of shares in series pOrTFOLIO brEAKDOWN

Market value Market value 30.6.2010, EUR million Weight in portfolio, % 30.6.2009, EUR million Weight in portfolio, % TeliaSonera 3 259.3 41.2% 2 285.8 38.1% Sampo A 1 377.1 17.4% 1 066.3 17.8% Outokumpu 701.6 8.9% 693.7 11.6% Rautaruukki 669.0 8.5% 793.1 13.2% Stora Enso 589.8 7.5% 418.9 7.0% Stora Enso A 341.9 263.0 Stora Enso R 247.9 156.0 Metso 416.2 5.3% 208.7 3.5% Elisa 236.5 3.0% 195.1 3.3% Sponda 236.0 3.0% 193.2 3.2% Kemira 228.4 2.9% 140.5 2.3% Tieto 100.8 1.3% Tikkurila 99.7 1.3% Total 7 914.4 100.0% 5 995.3 100.0%

NET ASSET VALUE CALCULATION

EUR million 30.6.2010 30.6.2009

Tangible and intangible assets 0.3 0.0 Equity investments 7 914.4 5 995.3 Current receivables 0.6 0.3 Money market investments 357.7 152.8 Assets, total 8 273.1 6 148.4

Current liabilities -3.8 -0.6 Deferred tax liability -554.5 -106.2 Liabilities, total -558.3 -106.8

Net asset value 7 714.8 6 041.6 Change in financial year, EUR 1 673.2 Change in financial year, % 28%

Publicly quoted securities and investment funds are valued at the price applicable to the most recent market transaction. All other balance sheet items are valued at their book-value. The deferred tax liability is 26% of the difference between the market value and book-value.

9 | ANNUAL REPORT 2010

Impact on society

Solidium’s portfolio companies are work abroad; only Elisa, Rautaruukki and influential within their own sectors in Sponda have most of their workforce in 80% of the the Nordic region and several of them Finland. companies’ turnover have a global impact. The companies The companies have a widely scat- employ over 140,000 people in total tered ownership base. A significant is generated abroad; and in 2009 they generated more than proportion of the share capital, 61 per EUR 39 billion of turnover. They paid cent on average, is held by foreign over 2/3 of the a total of EUR 790 million in taxes in institutions (e.g. pension funds, equity 2009 and their profit distributions funds). On the other hand, Finnish employees are amounted to a total of EUR 2.2 billion households feature prominently in the in spring 2010. ownership structure. Each of Solidium’s abroad The majority of the business opera- investment targets has thousands, some tions undertaken by Solidium’s portfolio even tens of thousands of Finnish Whilst the increased internationali- companies take place abroad. Over 90% households as shareholders. sation of these companies means higher of the turnover of Metso, Outokumpu Measured in proportions of owner- foreign sales and more foreign person- and Stora Enso is generated outside ship, Stora Enso and TeliaSonera have nel, Finns retain a strong interest in the Finland. Over two-thirds of personnel the most international ownership bases. financial success of the companies, both A total of 68 per cent of Stora Enso’s through direct share ownership and owners are foreign, while 81 per cent of through institutions that invest Finnish those investing in TeliaSonera are non- pension and insurance premiums. Finnish (Swedish investors account for Because different groups of inves- 65 per centages of this figure). tors are able to adopt different investment strategies in changing markets and thus stabilise the markets and add liquidity, it is important in terms of the smooth operation of the Finnish capital markets that the companies have foreign shareholders as well as a Finnish institutional ownership base and an extensive base of small investors in Finland.

10 IMPACT ON SOCIETY

DATA ON IMpACT

Turnover 2009, Turnover generated Company EUR million outside Finland, % Elisa 1 430 9% Kemira 1 970 86% Metso 5 016 93% Outokumpu 2 611 95% Rautaruukki 1 950 70% Sampo 4 568 65% Sponda 243 9% Stora Enso 8 945 93% TeliaSonera 10 280 84% Tieto 1 706 52% Tikkurila 530 80% Total 39 249 80%

Note: Kemira’s turnover is pro forma (excluding Tikkurila)

Number of employees, Number of employees Proportion of foreign Company 2009 outside Finland employees, % Elisa 3 331 300 9% Kemira 4 955 3 890 79% Metso 27 166 18 473 68% Outokumpu 7 606 4 903 64% Rautaruukki 11 648 5 743 49% Sampo 7 087 4 922 69% Sponda 134 14 10% Stora Enso 28 696 20 450 71% TeliaSonera 29 734 24 893 84% Tieto 16 663 10 905 65% Tikkurila 3 538 2 774 78% Total 140 558 97 267 69%

Note: i) Kemira’s employee figure is pro forma (excluding Tikkurila), ii) Elisa’s employee figure is an estimate by Solidium based on breakdown of turnover figures

Number of shareholders, Proportion of foreign holders, Company 30.6.2010 % of shares Elisa 230 153 25% Kemira 32 078 11% Metso 45 068 52% Outokumpu 38 807 22% Rautaruukki 45 106 21% Sampo 83 142 49% Sponda 9 659 44% Stora Enso 75 100 68% TeliaSonera 622 194 81% Tieto 25 152 50% Tikkurila 28 530 5% Total market value held by foreign shareholders 31 560

Note: i) Shareholder numbers are not in aggregate because of possible overlap, ii) Number of Stora Enso and Tieto shareholders are from the 2009 annual report.

Profit distribution, Taxes paid in 2009, Market value, Company 1.1.–30.6.2010, EUR million EUR million 30.6.2010, EUR million Elisa 143 57 2 215 Kemira 41 23 1 338 Metso 105 138 3 968 Outokumpu 64 -36 2 261 Rautaruukki 62 21 1 669 Sampo 561 275 9 749 Sponda 33 3 688 Stora Enso 158 3 4 740 TeliaSonera 1 035 288 23 755 Tieto 36 14 971 Tikkurila 0 3 679 Total 2 238 790 52 035

Note: Kemira’s profit distribution excludes the Tikkurila shares that were distributed. Kemira’s taxes are pro forma (excluding Tikkurila)

11 Elisa provides fixed-line and wireless telecommunication services to consumers and corporate customers. Elisa’s service provision covers mobile and fixed-line subscriber connections, broadband connections as well as ICT and other services. In the first half of 2010, consumer customers accounted for 60 per cent of the turnover and 63 per cent of the operating profit. Thanks to Elisa’s corporate history, its fixed-line network is particularly solid in Uusimaa Elisa Corporation and in the Tampere, Jyväskylä and Joen- suu regions. The wireless 3G network is the most comprehensive in Finland, million consumer customers regionally covering over 90 per cent of the Solidium's holding (%) and around 150,000 corporate custom- country’s population. 10.0 ers internationally. The company offers As a result of its historical basis as Weight in Solidium's services under the Elisa and Saunalahti a telephone cooperative, Elisa continues 3.0 equity portfolio (%) brands. Elisa’s goal is to improve the Market value of productivity of organisations in the holding as at 30.6.2010 network and to develop ICT and online 236 (EUR million) services for consumers and corporate Profit distribution customers. to Solidium, 22.0 1.7.2009–30.6.2010 The company’s turnover in 2009 Chairman of the (EUR million) was EUR 1.4 billion and operating profit board of Directors: EUR 267 million. Over 90 per cent of Risto Siilasmaa bUSINESS OpErATIONS AND the turnover and operating profit was STrATEGY generated in Finland and the rest in Elisa is a Finnish mobile and fixed-line Estonia. The corporation employs president & CEO: service provider that operates in the around 3,500 people. Elisa operates Veli-Matti Mattila Nordic and Baltic countries as well as globally in cooperation with Vodafone Russia. The company serves some two and Telenor.

12 PORTFOLIO

to operate with a considerable Finland- competed to increase their market Teleoperators have always invested based ownership structure. With its shares. Elisa’s churn in mobile subscrip- heavily in fixed-line and wireless net- over 230,000 shareholders, it has the tions grew in the first half of the year to works. Elisa forecasts that in the next most extensive ownership base of all over 15.5 per cent of the customer base, few years its investments will be around the companies listed on the Helsinki reflecting the competition in the Finnish 10–12 per cent of turnover. It is Stock Exchange. Elisa underwent a wide- markets. expected that a significant proportion reaching integration phase in the first Elisa’s turnover in the first half of of this amount will be allocated for the years of the new millennium, resulting 2010 grew by 1.6 per cent year-on-year. development of new products and in the merger of the previously separate Operating profit was at the same level services. telephone cooperatives and telephone as in the previous year. In consumer companies to form the single Elisa. business the growth was generated SOLIDIUM’S VIEW In the next phase of the strategy Elisa through an increase in the demand for Elisa’s publicly stated medium to long- reinforced its market standing in its services and increased mobile business. term objective is to grow at a faster rate key areas, making it the largest mobile The downward turn experienced in than the market average, with emphasis telephone operator in Finland, 2009 in corporate business became on new products and services. Elisa’s measured in subscription volumes. a slight upturn in the second quarter. extensive shareholder and customer In line with its strategy, Elisa will Recently, Elisa has launched numer- base in Finland is a considerable com- now focus on developing new products ous new services targeting consumers, petitive asset in this aspiration. and services for both consumer and such as IPTV entertainment service Elisa The majority of Elisa’s business corporate customers. Elisa will exploit Viihde, the security service Elisa Vahti operation is focused in Finland, where its extensive customer base and its and the audiobook service Elisa Kirja. the market is fairly mature with a high effective electronic distribution channel In addition to current operator density of subscriptions and high fixed- in the implementation and distribution services, Elisa’s future services for cor- line coverage. Prices are also under of the new services. porate customers will include solutions pressure due to strong competition in that integrate with ICT services. In the current product and service areas. rECENT DEVELOpMENTS spring 2010, Elisa acquired majority Elisa is in a robust financial position After the first quarter, the number of shareholding in Videra Oy, which spe- and has the potential to generate good Elisa’s mobile phone subscriptions broke cialises in video conferencing solutions, results. The company’s gearing is near- the three million mark. The first half of with a view to boosting Elisa’s market ing the lower limit of the long-term the year were characterised by strong position and competence in video target level, putting the company in pricing competition in telecommunica- conferencing services. a good position to pay dividends. tions, as the operators in the sector

SHARE PRICE DEVELOPMENT KEY INDICATORS EUR million 1–6/2010 2009 2008 EUR 25 Turnover 717 1 430 1 485 Operating profit 126 267 264 20 Operating profit, % 17.6 18.7 17.8 15 Net profit 48 177 177 Return on equity 20% 19% 10 Return on investment 13% 17% 16% 5 Equity ratio 42% 46% 43% 0 Gearing 93% 80% 93% Earnings per share (EUR) 0.31 1.13 1.12

1.1.2005 1.1.2006 1.1.2007 1.1.2008 1.1.2009 1.1.2010 Market value 2 215 2 484 1 914 Balance sheet total 1 935 1 965 2030 Elisa Dow Jones STOXX 600 Telecommunications Index The development of the sector index has been normalised with reference Number of employees 3 538 3 331 3 017 to the company share Profit distribution 143 156 Profit distribution to Solidium 15 7

BREAKDOWN OF TURNOVER Dividends are indicated under the financial period whose financial statements have been used as the basis for dividend payments. Finland, 91% Other countries, 9% MAJOR SHAREHOLDERS, 30 JUNE 2010 Number of Proportion of shares shares and votes, (%) Solidium Oy 16 631 000 10.0 Elisa Corporation 10 534 506 6.3 Varma 10 151 976 6.1 Ilmarinen 5 041 334 3.0 State Pension Fund 2 000 000 1.2

13 in chemicals for the pulp and paper industry. Globally Kemira is one of the three major operators in this segment. Kemira’s products are used to reduce the amount of water in production processes and to maintain the purity of the process. Chemicals are used, for instance, to eliminate microbes from the water circulation, in order to improve paper quality and boost process runna- bility. Kemira’s strategy for the Paper segment is to reposition it and focus on growing markets and selected products and customers. Municipal & Industrial segment generates almost one-third of Kemira’s turnover. Kemira is the world’s largest provider of coagulants used by local authorities and industry in water treatment. It is also a significant producer of polymers. The segment’s products are used for the treatment of drinking and industrial water and sludge. Market growth is based on rapidly increasing demand for clean water and water treatment, in particular in the major Kemira Oyj cities of the developing world. Kemira’s strategy is to grow the segment both in existing and new market areas. material efficiency. Kemira’s customers The Oil & Mining segment accounts Solidium's holding (%) 16.7 comprise companies operating in water- for around 15 per cent of Kemira’s intensive industries as well as public turnover. Its products are used e.g. in Weight in Solidium's equity portfolio (%) sector operators involved in water oil drilling to prevent coagulation and 2.9 treatment. to fill and pressurise oil deposits. They Market value of holding as at 30.6.2010 In 2009 Kemira’s continuing opera- are also used in various mining industry 228 (EUR million) tions (excluding Tikkurila, which was applications. Kemira is one of the most Profit distribution spun off in March 2010) generated important operators in the sector. to Solidium, turnover of around EUR 2 billion, and its Typically, customers are major compa- 7.0 1.7.2009–30.6.2010 operating profit, excluding non-recurring nies, but the business is fairly local. (EUR million) items, was EUR 110 million. In mid-2010 the Group employed around 5,200 people in 40 countries. The company’s bUSINESS OpErATIONS AND financial targets are operating profit of STrATEGY over 10 per cent and organic growth of Chairman of the Kemira focuses on water management 5 per cent per annum. The target for board of Directors: chemicals, offering a wide range of gearing is 40–80 per cent. Pekka Paasikivi products related to fibre chemistry, Kemira has the following segments chemical water treatment and water focusing on water and fibre treatment separation technology. Kemira provides chemistry: Paper, Municipal & Industrial president & CEO: solutions for the management of both and Oil & Mining. Harri Kerminen water quality and quantity, which boost Nearly one-half of the turnover customers’ energy, water and raw originates in the Paper segment, i.e.

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The company’s strategy focuses on measures following the phase of corpo- 2009 and the strong cash flow position, global growth, fuelled by a recovery in rate acquisitions in the new millennium. the company is in a good position to the production volumes of the mining The spin-off of Tikkurila served to pro- invest for growth. and oil industries. mote Kemira to a company focusing on Paper and pulp chemicals continue The remaining 10 per cent of water chemicals. Eighty-six per cent of to account for a significant proportion Kemira’s turnover is generated by a wide Tikkurila, previously wholly-owned by of Kemira’s sales. Because of challenges range of chemicals produced for, among Kemira, was distributed on 26 March faced in these customer segments, others, the food, animal feed, drugs and 2010 to its current owners in the form demand for the products in the mature textile industries. Most of the production of share dividends. At the same time markets will be weak. On the other hand, takes place in the ChemSolutions unit. Tikkurila was listed on the Helsinki emerging markets will increase their Kemira also has a 39 per cent stake in Stock Exchange. share, as the pulp industry is focusing Sachtleben, a producer of titanium Kemira has announced the initiation investment in South America and the oxide used as a pigment. of the Centre of Water Efficiency Excel- paper manufacturing industry in Asia. lence (SWEET) project in collaboration The Municipal & Industrial segment has rECENT DEVELOpMENTS with VTT Technical Research Centre of good opportunities for growth in the In the first six months of 2010, Kemira Finland. Participants will invest a total public sector in major, fast developing was able to maintain the positive trend of EUR 120 million in it over the next cities, but on the other hand, the slow initiated in 2009, with turnover increas- four years. It will employ 200 people development of local infrastructures ing by 7.5 per cent. Sales volumes rose annually. Other operators in the cluster may, in certain cases, place obstacles in out of the slump, with the Paper and will also become involved in the project. the way of growth. At the global level, Oil & Mining segments leading the way, Oil & Mining is a growth segment, but but they remain at historically low SOLIDIUM’S VIEW at present it represents still a small levels. The profit margin rose by around Kemira’s vision is to be a leading water portion of Kemira’s overall business two percentage points to 7.8 per cent chemistry company. The company operation. year-on-year. This was due to Kemira’s focuses on serving companies in water- In Solidium’s view, Kemira has all the efficiency measures in 2009 as well as intensive industries, where it is impor- prerequisites to carve itself a globally market recovery. Cash flow remained at tant to optimise water quality and con- recognised niche in the water treatment a good level and gearing was reduced to sumption. Kemira’s objective is to business sector. Furthermore, converting 48 per cent. achieve organic growth in its selected seawater to fresh water and the exploi- The Kemira of today, specialising in segments; the long-term outlook for tation of biomasses represent potential water treatment solutions, is the out- market growth promises well. Thanks for interesting new growth areas in the come of integration and centralisation to the share issue organised in autumn long term.

SHARE PRICE DEVELOPMENT KEY INDICATORS EUR million 1–6/2010 2009 2008 EUR Turnover 1 060 2 500 2 833 14 Operating profit 83 175 133 12 Operating profit, % 7.8 7.0 4.7 10 Net profit 55 96 35 8 Return on equity 9% 3% 6 Return on investment 9% 8% 7% 4 Equity ratio 50% 45% 34% 2 Gearing 48% 53% 108% 0 Earnings per share (EUR) 0.35 0.72 0.26 Market value 1 338 1 574 720 1.1.2005 1.1.2006 1.1.2007 1.1.2008 1.1.2009 1.1.2010 Balance sheet total 2 518 2 817 2 860 Kemira FTSE EUROFIRST 300 Chemicals Number of employees 5 177 8 493 9 405 The development of the sector index has been normalised with reference to Profit distribution 41 30 the company share Profit distribution to Solidium 7 5 Dividends are indicated under the financial period whose financial statements have been used as the basis for dividend payments. The figures BREAKDOWN OF TURNOVER include Tikkurila’s figures for previous financial years and for early 2010, up to the date of Tikkurila’s spin-off. The distribution of Tikkurila shares as Finland, 15% dividend is not taken into account in the profit distribution data. Rest of Europe, Near East and Africa, 50% MAJOR SHAREHOLDERS, 30 JUNE 2010 Number of Proportion of shares North America, 23% shares and votes, (%) South America, 6% Oras Invest Oy 25 933 622 16.7 Asia and Pacific region, 6% Solidium Oy 25 896 087 16.7 Varma 15 185 836 9.8 Ilmarinen 8 153 495 5.2 Kemira Oyj 3 600 225 2.3

15 added value at every phase of the lifecycle of the production process; they strengthen the customer’s competitive edge and minimise the harmful impact on the environment. Metso’s environmental business involves renewable energy sources, the energy efficiency of customers’ production processes, recycling, effective exploitation of raw materials and water, minimising dust, noise, waste, carbon dioxide and particle emissions as well as optimising the customer’s processes. Increases in energy consumption, globalisation and population growth as well as environmental and energy issues all represent opportunities for Metso in the long term. As the demand for metals and other raw materials continues to grow and raw material reserves to dwindle, the Metso Corporation mining sector represents promising growth opportunities for Metso. In Paper and Fibre Technology segment operations comprise product and Metso is a world leader and is able to Solidium's holding (%) 10.4 project business activities and service exploit its cutting-edge technology and business. its competence in process technology. Weight in Solidium's equity portfolio (%) Metso has created a global sales The energy and environmental techno- 5.3 and service network, in order to main- logy business focuses on developing Market value of holding as at 30.6.2010 tain a presence in the target markets products and solutions for cleaner 416 (EUR million) and to secure the optimal service stan- energy as well as automation products Profit distribution to dards for its customers. The company’s for a wide range of customer sectors. Solidium, 1.7.2009– main competitors in the supply of new 11.0 30.6.2010 (EUR equipment business and entire produc- rECENT DEVELOpMENTS million) tion plants are companies with global The last months of 2009 saw Metso operations whose product and service continuing to focus on adjusting its business partly overlaps with Metso’s organisation and cost structure to bUSINESS OpErATIONS AND offering. However, the number of com- STrATEGY petitors with capabilities to provide Metso supplies sustainable technologies total solutions is relatively small. and services to the mining, construction, Because the service business is more power generation, metal recycling local in nature, the competitors tend to Chairman of the and pulp and paper industries. Metso be small, local companies. board of Directors: operates in more than 50 countries and Metso invests heavily in the deve- Jukka Viinanen employs around 27,000 people world- lopment of environmental business. wide. Metso Corporation has three About 60 per cent of the company’s reporting segments: Mining and business operations can be classified as president & CEO: Construction Technology, Energy environmental business under the Jorma Eloranta and Environmental Technology and OECD guidelines. Environmentally Paper and Fibre Technology. Metso’s effective solutions give customers

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the decreased level of demand and Metso has received several significant Metso has three strong business boosting its cash flow. The cost-cutting orders during the year. Encouraged by segments which complement each measures have served to give Metso a the recovery in demand for metals and other. As the economic cycles in the solid competitive foundation as growth minerals, customers in the Mining and customer sectors of these business gets underway once more in Metso’s construction segment have once more segments vary from each other, this customer sectors. started to make new investments. tends to balance Metso’s performance In November 2009, Metso acquired As utilisation rates grow, replacement trends. Tamfelt Oyj, a manufacturer of paper investment is picking up. The Energy In the future Metso will focus its machine clothing and filter fabrics. The and Environmental business segment sales of new equipment on the emerging acquisition strengthens Metso’s position has profited considerably from new markets, while the service business will to provide services, a business that is power plant projects, for which Metso concentrate on the maintenance and important to the company and one that supplies boilers and automation systems. service of existing equipment in the balances its overall operation. Towards the end of last year the developed world. Factors that will have In the first half of the year, there mining sector, in particular, showed a positive impact on Metso’s business in was an increase in demand in Metso’s signs of increasing pressure on prices the long term are the need for new service business. Turnover grew by as demand slowed down. In the first infrastructure and the replacement of seven per cent compared to previous months of the current year, however, old infrastructure, the development of year, amounting to EUR 1,123 million. price pressures have eased. Stable price new forms of energy, the increasing role This is 45 per cent of Metso’s total levels contribute significantly to Metso’s played by the service business and the turnover. The service business stabilises profitability. A further factor in the economic growth in emerging markets. Metso’s overall operations and it plays profitability trend is the stability of Metso is a global operator in its an increasingly important role in pricing power. main sectors. The company has been Metso’s strategy. able to develop a high standard of In the first few months of the year, SOLIDIUM’S VIEW business and technological competence, demand took a positive turn and subse- As a result of updated operating models which can now be exploited widely in quently recovery is on a broader basis. and the capacity adjustments, Metso is the newer customer sectors, notably in The last 12 months have seen stronger well-placed to profit from the increased the environmental sector. The energy than expected demand for Metso’s investment activity becoming apparent and environmental technology segment Paper and Fibre Technology business, in its main markets, as the demand for has the potential for significant new due in particular to investments in pulp goods picks up. business lines. technology in South America and China.

SHARE PRICE DEVELOPMENT KEY INDICATORS EUR million 1–6/2010 2009 2008 EUR Turnover 2 540 5 016 6 400 60 Operating profit 210 271 631 50 Operating profit, % 8.2 5.4 9.8 40 Net profit 115 135 385 30 Return on equity 14% 8% 25% 20 Return on investment 13% 9% 23% 10 Equity ratio 36% 35% 29% 0 Gearing 29% 47% 77% Earnings per share (EUR) 0.76 0.90 2.72

1.1.2005 1.1.2006 1.1.2007 1.1.2008 1.1.2009 1.1.2010 Market value 3 968 3 693 1 207 Balance sheet total 6 059 5 715 5 511 Metso Bloomberg Europe Machinery-Diversified Index The development of the sector index has been normalised with reference to Number of employees 27 665 27 166 29 322 the company share Profit distribution 105 99 Profit distribution to Solidium 11 11 Dividends are indicated under the financial period whose financial statements have been used as the basis for dividend payments.

BREAKDOWN OF TURNOVER MAJOR SHAREHOLDERS, 30 JUNE 2010 Number of Proportion of shares Finland, 7% shares and votes, (%) Other Nordic countries, 8% Solidium Oy 15 695 287 10.4 Rest of Europe, 29% Marathon Asset Management North and South America, 28% LLP * 7 258 794 5.1 Asia and Pacific region, 22% Ilmarinen 4 162 637 2.8 Other countries, 8% Varma 4 113 552 2.7 State Pension Fund 1 910 000 1.3 * Based on flagging notice, 19.11.2008.

17 to grow, with Outokumpu the global market leader. Stainless steel is manufactured using ferrochrome. Outokumpu has its own ferrochrome mine in Kemi. The chromite from the mine is taken to Outokumpu’s own facility in Tornio, where it is enriched to produce ferrochrome. The proximity of its own ferrochrome mine has served to make the Outokumpu Oyj Tornio plant one of the most efficient in the world in the production of stainless steel. Currently around two-thirds of construction, process and chemicals Outokumpu’s ferrochrome requirement Solidium's holding (%) 30.9 industries as well as for transport and is met by production of chrome from catering applications. Outokumpu has its own mine. The investment in the Weight in Solidium's equity portfolio (%) its main production sites in Finland, expansion of ferrochrome production 8.9 Sweden, Great Britain and the United Market value of holding as at 30.6.2010 Sates. There are service centres in 702 (EUR million) 12 countries and operations in a total Profit distribution of 30 countries. to Solidium, Stainless steel accounts for a small 1.7.2009–30.6.2010 19.8 proportion of steel used worldwide, but Chairman of the (EUR million) demand is growing. Stainless is used in board of Directors: products with an increasing number of Ole Johansson bUSINESS OpErATIONS AND applications; demand is increasing with STrATEGY the growth of urbanisation and higher Outokumpu is one of Europe’s biggest standards of living. Alongside the basic president & CEO: stainless steel producers. The company products in the markets, Outokumpu Juha Rantanen produces hot and cold rolled, precision has developed its very own steel grades strip, tubular and long products for the (“duplex” grades). Their use is forecast

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capacity, which was announced in positive trend, Outokumpu’s capacity In summer 2010, the Finnish June 2010, will make Outokumpu self- utilisation rate at the start of the year parliament approved Fennovoima Oy’s sufficient in ferrochrome. was around 75 per cent, and in June the application to build a nuclear power Fluctuations in the prices of nickel capability was raised to full capacity in plant. Outokumpu has a 10 per cent and molybdenum, used as alloying Tornio. Group result turned positive in stake in Fennovoima and it is entitled elements in stainless steel, influence the second quarter of the year. to buy electricity at cost, quantities the price and demand of stainless steel. At the end of March 2010, Outo- defined in proportion to its ownership. Outokumpu is susceptible to the price kumpu made the decision to update Fennovoima plans to have the nuclear fluctuation of these raw materials in the the feasibility study on an investment reactor operational by 2020. course of its production process. project involving doubling its ferro- The company strengthened its Changes in inventory values are chrome production capacity to 530,000 foothold in Asia by opening a service reflected in the company’s financial tonnes at the Tornio plant. A decision centre in Kunshan, China in June 2010. result as part of normal business opera- was made in June 2010 to implement tions. It is part of Outokumpu’s strategy the EUR 440 million investment project. SOLIDIUM’S VIEW to increase sales of low nickel containing The original investment decision had Stainless steel producers are beginning grades and also increase sales directly been made in June 2008 but, due to the to recover from the low utilisation rates to end-users. These measures are economic crisis and uncertain markets, imposed by the economic crisis and expected to counter the significant the investment was postponed in the slump in demand. The outlook for fluctuations in demand and profitability December 2008. The project will be companies operating in the sector is that have been experienced previously. launched without delay and, once cautiously optimistic. Europe, however, Outokumpu’s goal is to be the completed, it will create around 120 continues to suffer from structural leading producer of stainless steel in permanent new jobs at the Tornio ferro- overcapacity and ineffective production, the world. Currently, its production chrome plant and in the mine in Kemi. and this is reflected in utilisation rates capacity is the sixth largest worldwide, It is estimated that the new extended and the price of steel in coming years. and 74 per cent of the production is capacity will be in use by the first half In Solidium’s view the ferrochrome sold in Europe. Part of the strategy is of 2013 and at full capacity in 2015. investment will reinforce Outokumpu’s to increase sales outside Europe. In June 2010 it was also decided to position among the industry’s most invest EUR 104 million to increase the efficient producers. Structural reorgani- rECENT DEVELOpMENTS production capability and capacity of sation may become a necessity, in order Demand for the standard grades of quarto plate in Degerfors, Sweden. to restore profitability in the sector to stainless recovered somewhat in the According to plans, most of the capacity a healthier basis and to boost the first months of 2010. Despite the will be operational in 2014. competitiveness of European producers.

SHARE PRICE DEVELOPMENT KEY INDICATORS EUR million 1–6/2010 2009 2008 EUR Turnover 2 026 2 611 5 474 50 Operating profit 49 -418 20.0 40 Operating profit, % 2.4 -16.0 0.4 30 Net profit 22 -321 -46 Return on equity 2% -12% -2% 20 Return on investment 3% -9% -1% 10 Equity ratio 44% 51% 52% 0 Gearing 68% 64% 51% Earnings per share (EUR) 0.12 -1.78 -0.26

1.1.2005 1.1.2006 1.1.2007 1.1.2008 1.1.2009 1.1.2010 Market value 2 261 2 400 1 492 Balance sheet total 5 718 4 850 5 341 Outokumpu Bloomberg Europe Steel Index The development of the sector index has been normalised with reference to Number of employees 8 617 7 606 8 471 the company share Profit distribution 64 90 Profit distribution to Solidium 20 28 Dividends are indicated under the financial period whose financial statements have been used as the basis for dividend payments. BREAKDOWN OF TURNOVER Europe, 74% MAJOR SHAREHOLDERS, 30 JUNE 2010 Number of Proportion of shares Asia, 14% shares and votes, (%) North and South America, 10% Solidium Oy 56 440 597 30.9 Australia and Oceania, 2% Social Insurance Institution 14 652 666 8.0 Ilmarinen 8 871 927 4.9 Varma 3 300 317 1.8 State Pension Fund 2 731 600 1.5

19 engineering and construction industries in selected market areas. In geographic terms, Rautaruukki focuses on the Nor- dic region in the sale of steel as well as on the growth markets of Central and Eastern Europe, with special emphasis on industrial and commercial construction as well as residential construction. By developing all three business areas, Rautaruukki aims to minimise the impact of sharp cyclical fluctuations in demand for steel products. In the Metals business area, Rauta- ruukki’s goal is to continue to develop high-strength and wear-resistant steel grades, which sell for prices that are higher than those of standard steel products. Special steel grades offer customers added value thanks to their durability and light weight, thereby extending the product’s life and giving the customer savings in costs for example. Special steel grades have good growth prospects. In the Construction business area Rautaruukki’s strategic priority is the growth markets of Eastern Europe. Rautaruukki The construction neglect opens good prospects for Rautaruukki’s concept of erecting industrial buildings time- and cost-efficiently. Corporation For end users of engineering products, Rautaruukki develops and The company offers a wide selection of manufactures both individual compo- Solidium's holding (%) 39.7 metal products and related services and nents and integrated systems. It is operates in 27 countries. The company’s Rauta-ruukki’s intent to get a more Weight in Solidium's equity portfolio (%) main customer sectors are infrastruc- in-depth insight into the customer’s 8.5 ture and industrial and commercial design process, in order to be able Market value of holding as at 30.6.2010 construction and the heavy and light 669 (EUR million) engineering industries. Profit distribution Ruukki operates under three busi- to Solidium, ness areas: Construction, Engineering 1.7.2009–30.6.2010 25.0 and Metals. Ruukki’s market area Chairman of the (EUR million) comprises Europe and its position in board of Directors: the Nordic countries is strong. The Reino Hanhinen bUSINESS OEprATIONS AND company’s focus for long-term growth STrATEGY is on Central and Eastern Europe, Rautaruukki supplies metal-based Russia and Ukraine. president & CEO: components, systems and integrated Rautaruukki’s strategic intent is to Sakari Tamminen systems to the construction and be a key operator in steel production mechanical engineering industries. and the supplier of solutions to the

20 PORTFOLIO

to fully exploit Rautaruukki’s expertise The price hike in carbon steel raw to the shutdown, the company had in special grade steels. materials may put pressure on profit- accumulated steel slab inventory, which ability, unless the raw material cost allowed uninterrupted supplies to rECENT DEVELOpMENTS rises can be transferred to customer customers. As customer demand grew For Rautaruukki, the year 2009 proved selling prices. Raw material prices have in spring 2010, the company has now to be a difficult one due to the slump in been subject to considerable fluctuation reached 80–90 per cent capacity demand. Demand bottomed out in the in recent years. The annual benchmark utilisation rates (excluding the effects second half of last year. In the current prices applied in the global market of the blast furnace shutdown). year, demand for carbon steel has pricing of iron ore were scrapped in revived in several industries, both in spring 2010. Instead, a quarterly quota- SOLIDIUM’S VIEW developing markets and in Europe, tion market is being formed. The expan- Rautaruukki is dependent, on the one improving the outlook for Rautaruukki. sion of major steel producers into raw hand, on the market price of carbon Although demand in Europe remains material production, gives them an edge steel as well as the demand for it, and fairly subdued, steel deliveries to the as the raw material pricing practice on the other hand, on the demand for engineering industry, for example, and changes, because they are better able its customers’ products and on the to automotive subcontractors increased to cover the price risk in iron ore, being solvency of its customer base. In order or remained on a high level. Another both producers and buyers of the raw to safeguard the financial feasibility of positive sign is the strong growth in material. its operation, a company operating in demand for special steels in Rautaruukki’s Rautaruukki is investing around the heavy steel industry must have near new market areas outside Europe. EUR 270 million to modernise its Raahe full capacity utilisation rates. The construction and engineering production plant. The investments, Global iron ore prices are adopting sectors are also showing signs of reviving taking place in 2009–2011, target the shorter cycles. This is likely to exacer- demand. During spring, the order flow blast furnaces, the pellet store and bate the raw material price fluctuations from the construction sector in Central environmental technology. suffered by smaller producers, such as and Eastern Europe and Russia started In carbon steel production the Rautaruukki. to pick up. Demand from the infrastruc- capacity utilisation rate of the produc- Rautaruukki’s selected markets and ture building sector remained at a good tion plant largely determines the profit- operating areas will offer several oppor- level. In the engineering sector, the ability of the operation. Due to the tunities for growth. However, there are product order flow took an upward modernisation work, Raahe’s blast no clear indications of long-term growth direction in the spring, and turnover furnace 2 was shut down for around in the demand for standard carbon steel was at the same level as at the end of two months in spring 2010, and this had in the developed markets. last year. an impact on the utilisation rate. Prior

SHARE PRICE DEVELOPMENT KEY INDICATORS EUR million 1–6/2010 2009 2008 EUR Turnover 1 160 1 950 3 851 60 Operating profit -2 -323 573 50 Operating profit, % -0.2 -16.6 14.9 40 Net profit -13 -275 410 30 Return on equity -7% -16% 21% 20 Return on investment -4% -11% 25% 10 Equity ratio 55% 60% 65% 0 Gearing 36% 22% 8% Earnings per share (EUR) -0.09 -1.98 2.98

1.1.2005 1.1.2006 1.1.2007 1.1.2008 1.1.2009 1.1.2010 Market value 1 669 2 241 1 688 Balance sheet total 2 654 2 532 2 983 Rautaruukki Bloomberg Europe Steel Index The development of the sector index has been normalised with reference to Number of employees 12 214 11 648 14 286 the company share Profit distribution 62 187 Profit distribution to Solidium 25 75 Dividends are indicated under the financial period whose financial statements have been used as the basis for dividend payments. BREAKDOWN OF TURNOVER Finland, 30% MAJOR SHAREHOLDERS, 30 JUNE 2010 Number of Proportion of shares Other Nordic countries, 31% shares and votes, (%) Central and Eastern Europe, Russia and Ukraine, 19% Solidium Oy 55 656 599 39.7 Capital Research and Rest of Europe, 14% Management Company * 7 297 852 5.2 Other countries, 6% Varma 3 514 322 2.5 Ilmarinen 2 517 417 1.8 OP Funds 2 077 604 1.5 * Based on flagging notice, 15.1.2010.

21 Nordea is the biggest financial services group in the Nordic and Baltic regions. Measured in market value, the company figures among the largest in the Nordic region. In addition to the Nordic countries, Nordea operates in Russia, Poland and the Baltic States. Nordea has approximately 10 million customers and around 1,400 branches. Nordea’s long-term goal is to double the risk-adjusted result (around EUR 2 billion) achieved in 2006 by the year 2013.

rECENT DEVVELOpMENTS Sampo plc P&C insurance is a sector that has suffered less than most in the economic company in the Nordic countries. It also recession. Year-on-year, If has produced Solidium's holding (%) 14.1 operates in the Baltic States and Russia. a low volatility and solid cash flow. If’s strategic long-term goals are better However, measured in market value If Weight in Solidium's equity portfolio (%) profitability and a higher degree of can produce significantly fluctuating 17.4 customer satisfaction than its competi- financial results from one year to the Market value of holding as at 30.6.2010 tors as well as a high level of credit- next, depending on equity market trends. 1 377 (EUR million) worthiness. The financial targets include The year 2009 was the company’s best Profit distribution achieving a combined ratio of less than ever, in terms of mark-to-market profit to Solidium, 95 per cent and a return on equity of before taxes, which was EUR 1,353 mil- 79.3 1.7.2009–30.6.2010 at least 17.5 per cent. lion (EUR -19 million in 2008). Due to (EUR million) Mandatum Life is responsible for the harsh winter experienced in the life insurance operations and asset bUSINESS OpErATIONS AND management under an insurance STrATEGY wrapper. Its primary operating area is Sampo Group’s operations are divided Finland, and it also has a subsidiary in into two business areas: property and the Baltic States. The majority of the Chairman of the casualty insurance and life insurance. company’s total technical provisions board of Directors: The parent company, Sampo plc, has an comprise with-profit insurance portfolio, Björn Wahlroos associated company, Nordea Bank AB, but new business focuses on unit-linked with Nordic banking operations, of insurance, risk products and voluntary which Sampo’s share was 20.5% on corporate pension schemes. Mandatum Group CEO: 30 June 2010. Life’s financial target is to produce a Kari Stadigh If P&C Insurance Company is the return on equity of at least 17.5 per leading property and casualty insurance cent.

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Nordic countries, 2010 began on a chal- Sampo has received dividends from both insurance and banking business lenging note for property and casualty Nordea amounting to around EUR 450 operations. The final format of the new insurers. In the first quarter, If incurred million in 2007–2010. Nordea has regulations remains open in summer exceptional insurance indemnities, due weathered well the financial crisis, and 2010, and due to the serious problems to the winter weather, amounting to its credit loss has remained at a reason- in the eurozone economies it is possible around EUR 70 million. If’s combined able level. In the first six months of that the new regulations will not be ratio in the first half of 2010 was 94.1 2010, net loan loss provisions dropped implemented in the near future or in per cent, when it was 92.5 per cent in to 0.36 per cent per annum, whereas in the format envisaged. In Solidium’s view the equivalent period in 2009. Increased 2009 they were 0.54 per cent, or potentially tighter regulations do not competition in the sector has pared almost EUR 1.5 billion. pose a problem for If because, in order down off If’s market share in Finland In 2006 and 2007, Sampo reduced to achieve the credit rating that is a and Norway. its equity weights considerably and condition for the conduct of business Due to the positive correction in the achieved significant gains in the reces- even at present, the company must equities markets in 2009, Mandatum sion by buying and retaining in its meets the capital adequacy requirement. Life’s mark-to-market result also broke portfolio corporate bonds, whose risk Solidium believes that the solvency all records at EUR 658 million in 2009. premiums were high. In 2009 the equity capital of Mandatum Life is on a stable The 2009 book profit before taxes was weight was increased, and the company basis at the moment. EUR 121 million. In unit-linked products, now reaped the benefits of the strong Economics of scale are significant in in particular, Mandatum Life’s premiums positive corrections in the equities property and casualty insurance. In the written has increased considerably. In markets. In the first months of 2010, current markets organic growth will the first half of 2010, premiums written Sampo has underweighted government remain modest, with the result that grew by 82 per cent year-on-year and bonds and further increased the equity cost-efficiency and success in under- profit before taxes by 31 per cent. weight. writing will gain in importance. In 2007, Sampo sold Sampo Bank In Solidium’s opinion Nordea has to Danske Bank for a good four billion SOLIDIUM’S VIEW adopted a disciplined approach in its euros. Following the sale, Sampo has In the insurance business a significant credit risk control. Consequently, loan invested around EUR 5.3 billion euros share of the profit is generated by losses caused by the financial crisis in Nordea shares, becoming Nordea’s investment activities, and in recent and the recession will be smaller than largest shareholder with its 20.5 per years Sampo has displayed exemplary anticipated in Nordea, and decreasing cent stake in the company. As at 30 competence in this field. loan losses, a trend begun in early 2010, June 2010 the value of the shareholding Currently there are major plans will continue. stood at EUR 5.7 billion. Furthermore, afoot to amend the regulation targeting

SHARE PRICE DEVELOPMENT KEY INDICATORS EUR million 1–6/2010 2009 2008 EUR Premiums written 2 961 4 479 4 350 25 Profit before taxes 621 825 870 20 Net profit 518 641 675 15 Earnings per share (EUR) 0.92 1.14 1.18 Net asset value per share (EUR) 14.50 14.63 8.28 10 Return on assets 10% 17% -7% 5 Return on equity 20% 54% -32% 0 Market value 9 749 9 553 7 433 Balance sheet total 28 295 26 635 21 149

1.1.2005 1.1.2006 1.1.2007 1.1.2008 1.1.2009 1.1.2010 Number of employees 6 899 7 087 7 458 Profit distribution 561 449 Sampo OMX Nordic Financials The development of the sector index has been normalised with reference to Profit distribution to Solidium 79 63 the company share Dividends are indicated under the financial period whose financial statements have been used as the basis for dividend payments.

MAJOR SHAREHOLDERS, 30 JUNE 2010 BREAKDOWN OF PREMIUMS Proportion WRITTEN Number of of shares Proportion shares (%) of votes(%) Finland, 35% Solidium Oy 79 280 080 14.1 14.0 Norway, 29% Varma 47 709 421 8.5 8.4 Sweden, 25% Capital Research and 28 485 301 5.1 5.0 Denmark, 7% Management Company * Baltic States, 4% Ilmarinen 15 007 445 2.7 2.7 Björn Wahlroos 11 756 737 2.1 2.1 * Based on flagging notice, 18.12.2009

23 point in the programme, but environmental considerations and sustainable development are taken into account in every process, from the design of new premises to the strategy applied in ownership. Sponda has real estate properties in Russia, in desirable market areas in the heart of Moscow and St. Petersburg. Currently, investments by the Russia Sponda Plc Business Unit account for around 7 per cent of the company’s real estate investment portfolio, but Sponda is looking metres, consisting of office and retail to increase that figure. Solidium's holding (%) 34.3 premises and logistics properties. The fair value of the investment properties rECENT DEVELOpMENTS Weight in Solidium's equity portfolio (%) is EUR 2.8 billion. For the first six months of 2010, the 3.0 Office and retail premises accounted business environment in Sponda’s market Market value of holding as at 30.6.2010 for 52 per cent, shopping centres for areas in Finland and Russia remained 236 (EUR million) 19 per cent, logistics premises for 15 per challenging. As a result of a slowdown Profit distribution cent, real estate funds for 4 per cent in the demand for commercial premises, to Solidium, and the Russia Business Unit for 10 per 11.4 1.7.2009–30.6.2010 cent of the company’s net income in the (EUR million) first six months of 2010. The company has four business units: Investment bUSINESS OpErATIONS AND Properties, Property Development, STrATEGY Real Estate Funds and Russia. Chairman of the Sponda is a real estate investment Sponda’s objective is the ongoing board of Directors: company that specialises in commercial development of the property portfolio Lauri Ratia properties. The company operates in by selling, constructing and acquiring the Helsinki metropolitan area and real estate investment properties. other large Finnish cities as well as In 2009, Sponda chose comprehen- president & CEO: St. Petersburg and Moscow, Russia. The sive environmental competence as the Kari Inkinen leasable area of Sponda’s investment priority theme of its corporate responsi- properties is around 1.5 million square bility strategy. Energy efficiency is a key

24 PORTFOLIO

market rents continued their downward towards the end of the year, provided SOLIDIUM’S VIEW trend, but now the price reduction that there are not any unexpected Real estate investment operates in a appears to have bottomed out. Vacancy changes in the current economic post-cyclic business sector, and the rates have been on the rise, and several development trend. Demand for busi- economic situation affects the value market analyses predict that in the ness premises is closely tied to the development of property portfolio. office premises market vacancy rates trend in GDP as well as industrial The continuing poor predictability of may continue to rise. Real estate trans- activity in general. A rise in industrial economic development is dampening actions were sluggish in the first activity quickly translates into increased the interest of companies in changing months of 2010. demand for logistics premises. premises or renting new facilities for The vacancy rate in Sponda’s real Sponda is developing 22,000 floor the time being. The rising yield demands estate portfolio was 12.7 per cent at the square metres of production and office have, however, been halted as has the end of the first half of 2010, a year-on- space for Metso Automation Oy in slide in market rents in good market year reduction of around 0.7 percentage Hakkila in the city of Vantaa. The total areas. In Solidium’s view, Sponda is in points. The high vacancy rate can be investment is worth around EUR 40 a good position to increase its net asset attributed in part to the low demand million. Sponda’s major development value per share in the next few years. for the rental premises completed in project, City-Center, in the heart of Thanks mainly to the historically Vuosaari Harbour, as industrial export the Helsinki will be ongoing until 2012. low interest rates, the banks providing companies show little interest in rental The company reports that this financing for the real estate sector have premises. year’s refinancing need has been met, not so far incurred any significant credit As the real estate market levelled part of it due to the issue in May 2010 losses in the Finnish property markets. out in the early months of 2010, there of a EUR 100 million bond. In the Property investors remain uninterested were no significant value changes in current environment Sponda will in poorly maintained properties in the Sponda’s real estate portfolio. In the finance its development projects weaker market areas. second quarter, the company’s net primarily by property sales. Solidium expects Sponda’s cash assets per share took a slight upward On 6 July 2010, Sponda announced flow to remain stable in the next few turn, reaching by the end of June that the Supreme Administrative Court years, because the company’s major EUR 3.55. Sponda’s equity ratio stood had decided in favour of Sponda in the tenants include solvent corporations at 37 per cent. The company’s long-term case involving the right to deduct and on average the leases are long-term. target is to raise the equity ratio to Sponda Kiinteistöt Oy’s confirmed The financing market has stabilised and 40 per cent. losses of EUR 558 million. The decision thus, Sponda will be in a good position Sponda expects the economic does not have any effect on Sponda’s to make financing decisions. occupancy rate to continue to rise 2010 result.

SHARE PRICE DEVELOPMENT KEY INDICATORS EUR million 1–6/2010 2009 2008 EUR Turnover 116 243 224 9 8 Operating profit 93 -13 117 7 Operating profit, % 80.2 -5.5 52.3 6 Net profit 47 -82 29 5 4 Return on equity -8% 3% 3 Return on investment 0% 4% 2 Equity ratio 37% 37% 32% 1 0 Gearing 142% 141% 180% Earnings per share (EUR) 0.15 -0.35 0.16

1.1.2005 1.1.2006 1.1.2007 1.1.2008 1.1.2009 1.1.2010 Market value 688 758 344 Balance sheet total 2 993 2 990 3 175 Sponda EPRA real estate investment index The development of the sector index has been normalised with reference to Number of employees 121 134 141 the company share. Profit distribution 33 0 Profit distribution to Solidium 11 0 Dividends are indicated under the financial period whose financial statements have been used as the basis for dividend payments. BREAKDOWN OF TURNOVER Finland, 91% MAJOR SHAREHOLDERS, 30 JUNE 2010 Number of Proportion of shares Russia, 9% shares and votes, (%) Solidium Oy 95 163 745 34.3 Cohen & Steers, Inc. * 13 898 317 5.0 Ilmarinen 12 052 730 4.3 Varma 1 956 617 0.7 State Pension Fund 1 706 111 0.6 * Based on flagging notice, 2.3.2010.

25 rates, thereby weakening profitability. Market restructuring and structural development is a laborious and costly process and, in addition to production closures, it may require consolidation. The problems in the sector have continued, partly because sufficiently large-scale capacity closures and the resulting write-downs are a challenge for many companies due to their weak balance sheets. Stora Enso’s strategy includes future focus on growing markets, with emphasis on Latin America and China. Both production and consumption will grow significantly in these markets, driven by growth in standards of living and a resulting increase in the per capita consumption of paper and board. In pulp production, the company will focus on plantation-based pulp, which has a low cost structure. This offers a significant cost benefit thanks to the rapid growth of pulpwood. Stora Enso has notable areas of plantations in Latin America and China, which can Stora Enso Oyj accommodate investment in extensive pulp production. Stora Enso currently has a joint venture in Brazil, which plants in more than 35 countries. produces 1.1 million tonnes of short- Solidium's holding (%) 12.3 Around 8,200 of its employees work fibre pulp. in Finland. In terms of turnover, a good Fibre-based packaging is set to Weight in Solidium's equity portfolio (%) one-third of the production originates take a significantly larger role in the 7.5 in Finland. company’s operations. Even at present, Market value of holding as at 30.6.2010 Stora Enso’s customers include Stora Enso is globally a major manufac- 590 (EUR million) publishers, printing houses, paper turer of consumer packaging board and Profit distribution merchants as well as the packaging, a dominant producer of board used to Solidium, joinery and construction industries. in liquids packaging. Fibre-packaging 38.8 1.7.2009–30.6.2010 The company’s turnover in 2009 was overall is a globally growing segment (EUR million) EUR 8.9 billion and the operating profit, excluding non-recurring items and bUSINESS OpErATIONS AND impairments, was EUR 320 million. STrATEGY Stora Enso generates the majority Stora Enso is one of the biggest forest of its turnover in Europe, where market Chairman of the industry companies in the world. Its growth is either slow or negative, in board of Directors: main products are newsprint and book publication and fine paper in particular. Gunnar Brock paper, magazine and fine paper, consumer To compound, almost every paper seg- and industrial packaging and wood ment in Europe suffers from structural products. The company also sells overcapacity, due to over-investment Chief Executive market pulp. and weak growth in demand. This Officer: The Group employs some 27,000 significantly impairs producers’ pricing Jouko Karvinen people and runs 85 mills and production power and lowers the mills’ utilisation

26 PORTFOLIO

and is likely to replace much of the adjustments involving the closure of In February 2010, Stora Enso plastic packaging used at present, not several production plants as well as launched an feasibility study for the least because it is an environmentally outsourcing activities and paring down Punta Pereira mill area in Uruguay. friendly solution. the administrative structure. The latest A joint venture between Stora Enso and In line with its strategy, instead of measures include the shutdown of Arauco is planning a major pulp mill in the current wide product range, Stora newsprint production at the Varkaus the area. The study will be completed Enso will focus on selected paper mill by the end of October 2010 and during 2010. grades. The aim is to concentrate on the sale of the mills in Kotka. product areas, where there is potential In the first half of 2010, Stora Enso’s SOLIDIUM’S VIEW to achieve a notable market position profitability continued to improve, Stora Enso is still in the process of and competitive edge and a satisfactory thanks to the efficiency measures and transforming itself from a global forest level of return. Increasingly, investments a pick-up in demand. Increased volumes, industry conglomerate to a focused will be specifically targeted in accordance improved pricing and favourable paper and pulp and packaging company. with long-term outlooks. exchange rates meant that turnover Solidium believes that the company’s grew considerably on the previous strategy is the right one and will consi- rECENT DEVELOpMENTS year’s level. Demand remains, however, derably improve its competitiveness and Stora Enso Group has undergone a at a historically low level. Operating value creation in the long run. The phase of rigorous change and reorgani- profit, excluding non-recurring items, business potential in Latin America and sation in recent years. New strategy and increased from the 2009 benchmark’s China is good, and the ground gained by operating models have been introduced zero level to almost EUR 400 million. the company in fibre-based packaging throughout the organisation. Thorough The proportion of working capital and particularly in liquid packaging reform has been necessary for the com- has been reduced substantially as part boards may lead to significant value pany to have a chance of success in the of the efficiency measures. In the space creation. Stora Enso is in a good position changed environment in which forest of 12 months, the ratio between working to participate in the structural transfor- industry now operates. For example, capital and turnover decreased from mation of forest industry in Europe, with reference to paper production in 22 per cent to 17 per cent, which should the company wish to be Europe the company is replacing an equates to around half a billion euros. involved. Biofuels and biorefinery investment policy that sought increase Despite recent sizeable write-downs products, as well as products used in in production with a policy that focuses and operating losses, the company’s wood building, for example, incorporate on profitability and the lifecycle of balance sheet remains strong, and notable business opportunities. assets. The reform also includes capacity refinancing problems have not emerged.

SHARE PRICE DEVELOPMENT KEY INDICATORS EUR million 1–6/2010 2009 2008 EUR Turnover 4 988 8 945 11 029 16 14 Operating profit 339 321 388 12 Operating profit, % 6.8 3.6 3.5 10 Net profit 262 153 143 8 Return on equity 10% 3% 2% 6 Return on investment 8% 6% 4% 4 Equity ratio 45% 45% 46% 2 0 Gearing 49% 55% 60% Earnings per share (EUR) 0.33 0.19 0.18

1.1.2005 1.1.2006 1.1.2007 1.1.2008 1.1.2009 1.1.2010 Market value 4 740 4 020 4 373 Balance sheet total 12 296 11 593 12 241 Stora Enso Bloomberg World Forest Products & Paper Index The development of the sector index has been normalised with reference to Number of employees 28 040 27 390 31 667 the company share Profit distribution 158 158 Profit distribution to Solidium 19 19 Dividends are indicated under the financial period whose financial statements have been used as the basis for dividend payments.

BREAKDOWN OF TURNOVER MAJOR SHAREHOLDERS, 30.6.2010 Number of Number of Proportion Proportion Germany, 18% A series R series of shares of votes Sweden, 9% shares shares (%) (%) Finland, 7% Solidium Oy 55 595 937 41 483 501 12.3 25.1 Rest of Europe, 47% Foundation Asset Other countries, 20% Management 63 123 386 17 000 000 10.1 27.2 Social Insurance Institution of Finland 23 825 086 2 775 965 3.4 10.1 Ilmarinen 3 492 740 20 794 108 3.1 2.3 Varma 15 572 117 140 874 2.0 6.5

27 mobile devices is still low. In these markets the fixed networks are not up to western standards, and the use of communications devices relies on mobile station networks. TeliaSonera’s subsidiaries are the market leaders in Kazakhstan, Azerbaijan, Tajikistan and Georgia and the second biggest in Uzbekistan, Moldova and Nepal.

rECENT DEVELOpMENTS TeliaSonera has coped very well in the recession, with profitability at particularly good levels in the Nordic countries and Eurasia. In Sweden, TeliaSonera was able to increase its turnover in mobile communications services by 8 per cent and EBITDA -% to 41 per cent (H1/2009: 39 per cent year-on-year in the first half TeliaSonera AB of 2010). This was partly due to increased returns on mobile data services. In Finland TeliaSonera lost the Solidium's holding (%) Stockholm, Sweden, and it employs market leadership (measured in sub- 13.7 a total of around 29,700 people. scriptions) in mobile communications Weight in Solidium's In the Nordic region, TeliaSonera is services to Elisa in 2009. The associated 41.2 equity portfolio (%) the market leader in Sweden, in both company Turkcell has displayed weaker Market value of mobile communications and broadband performance than previously, with a 37 holding as at 30.6.2010 services. In Finland and Norway, Telia- per cent year-on-year drop in returns in 3259 (EUR million) Sonera is the second largest market the first six months of the year. This Profit distribution operator, whilst in Denmark the was due, in part, to non-recurring items. to Solidium, company’s position is that of challenger. The most significant event taking 141.9 1.7.2009–30.6.2010 (EUR million) In the Baltic States, TeliaSonera is the place in 2009 was the agreement biggest operator in both mobile commu- concluded with the Russian company nications and broadband services. Altimo on the merger of the MegaFon bUSINESS OpErATIONS AND The priority in these mature markets is STrATEGY to optimise profitability and cash flow. TeliaSonera is the biggest provider of A significant proportion of Telia- telecommunications services in the Sonera’s value is generated by two Nordic and Baltic countries. It also associated companies, Turkcell which Chairman of the operates in the Eastern European and is a Turkish enterprise, and the Russian board of Directors: Asian mobile communications markets MegaFon. Turkcell is by far the biggest Anders Narvinger and in Spain. The company’s operations mobile operator in Turkey. MegaFon is (including associated companies) span the second largest provider of mobile 20 countries, with a total of 450 million services in Russia. president & CEO: inhabitants. TeliaSonera’s main products TeliaSonera’s goal is to expand Lars Nyberg are mobile and fixed-network services. operations in the emerging markets of The company’s headquarters are in Eurasia, where the penetration of

28 PORTFOLIO

and Turkcell holdings. Once implemented, 25 cities in Sweden and four Norwegian income that are somewhat weaker than the arrangement means that the hold- cities. The company has also been those of its competitors. Primarily the ings will be transferred to a new holding granted a 4G operating licence in Finland problem stems from the differences company. The objective of the arrange- and Denmark. TeliaSonera is investing in views between the owners of the ment is to increase control as well as to heavily in the improvement of the Russian company, MegaFon, which have improve the liquidity of the holdings mobile networks in Eurasia. It has also prevented dividend payment despite and resolve long-standing disputes invested in fibre optic networks in the MegaFon’s positive levels of profitability. between the owners, in both MegaFon Nordic and Baltic regions. TeliaSonera Solidium supports TeliaSonera’s efforts and in Turkcell. curbed its investment programme in to resolve the problem. TeliaSonera has In 2009, and continuing into 2010, 2009 due to the general economic a strong balance sheet, which means TeliaSonera implemented its strategy situation, continuing the restrained that the company’s profit distribution and increased its shareholdings in approach in the first months of 2010. capacity will be good for the next few subsidiaries with minority shareholders. According to the company, investment years. TeliaSonera made a public tender offer levels will rise in the second half of In the 2010 shareholders’ general to buy the remaining Eesti Telekom 2010. meeting the largest shareholder, the shares (it had an approximately 60 per State of Sweden, managed to push cent shareholding before the tender). In SOLIDIUM’S VIEW through its proposal concerning the January it acquired the company’s entire TeliaSonera has taken determined and removal of the management’s variable share capital. In October 2009, Telia- effective steps to ensure that profit- remuneration components. Out of the Sonera increased its shareholding in the ability improves. Because competition 20 largest shareholders, all but the Lithuanian company TEO LT from just will remain fierce and growth modest in State of Sweden supported the Board under 63 per cent to a good 68 per mature markets, in the Nordic region of Director’s conservative proposal to cent. In February 2010, TeliaSonera and the Baltic countries, the focus will include variable remuneration compo- announced that it had increased to 94 be on maintaining cost-effectiveness. nents in the compensation packages of per cent its shareholding in UCell, an In the next few years, the company Group Management. As a result of the Uzbek company, by buying a 20 per cent will make significant investments to decision, Group Management’s fixed stake for USD 220 million. In July 2010, improve both mobile and fixed-network salaries had to be increased by 30 per TeliaSonera sold its Danish subsidiary, services in Sweden and Finland as well cent. In Solidium’s view, performance- Stofa, to Ratos for DKK 1.1 billion. as in its other operating regions, in order related, moderate variable remuneration In 2009, TeliaSonera was the first to be able to cope with the rapidly components are a useful tool for the operator to launch commercial 4G growing volumes of data transfers. company’s board to reward manage- services. During 2010, the construction TeliaSonera’s share price has been ment and promote commitment. of the 4G network will progress to influenced by a cash flow and dividend

SHARE PRICE DEVELOPMENT KEY INDICATORS SEK million 1–6/2010 2009 2008 SEK Turnover 53 054 109 161 103 585 70 60 Operating profit 15 146 31 679 30 041 50 Operating profit, % 28.5 29.0 29.0 40 Net profit 9 960 19 820 19 827 30 Return on equity 16% 15% 16% 20 Return on investment 16% 15% 16% 10 Equity ratio 51% 53% 54% 0 Gearing 40% 34% 37% Earnings per share (SEK) 2.22 4.41 4.42

1.1.2005 1.1.2006 1.1.2007 1.1.2008 1.1.2009 1.1.2010 Market value 226 095 232 830 174 679 Balance sheet total 255 515 269 670 264 286 TeliaSonera Dow Jones STOXX 600 Telecommunications Index The development of the sector index has been normalised with reference to Number of employees 29 726 29 734 32 171 the company share Profit distribution 10 104 8 083 Profit distribution to Solidium 1 386 1 109 BREAKDOWN OF TURNOVER Dividends are indicated under the financial period whose financial statements have been used as the basis for dividend payments. Sweden, 33% Finland, 16% MAJOR SHAREHOLDERS, 30 JUNE 2010 Norway, 9% Number of Proportion of shares shares and votes, (%) Other countries, 41% State of Sweden 1 674 310 553 37.3 Solidium Oy 616 128 221 13.7 Swedbank Robur Funds 148 762 123 3.3 Alecta 122 525 000 2.7 SEB Funds 75 133 259 1.7

29 Application management and utilisation services include the maintenance, development and improvement of existing applications. Around one-fifth of the turnover is generated by ICT infrastructure services. Frequently, the customer outsources the management of its entire physical ICT infrastructure to Tieto. Agreements are typically long-term and the cyclical fluctuations generally more moderate than in the project service business area. Tieto is Europe’s largest supplier of telecom R&D services. Its service offering covers software design and Tieto Corporation development as well as the maintenance of the software in the customer’s own products. 2011. Tieto also also seeks to establish Tieto’s headcount develops differ- Solidium's holding (%) 10.3 a strong presence in Russia and become ently between countries with high costs the world-leading R&D partner in the and those with a lower cost structure. Weight in Solidium's equity portfolio (%) telecom sector. The company is recruiting employees in 1.3 Tieto’s turnover in 2009 was countries with low levels of costs, Market value of holding as at 30.6.2010 around EUR 1.7 billion, while the opera- where 34 per cent of Tieto’s employees 101 (EUR million) ting profit, excluding non-recurring are already situated. In these global Profit distribution items, came to EUR 108 million. At the to Solidium, end of June 2010, the Group employed - 1.7.2009–30.6.2010 a total of 17,000 people in 26 countries, (EUR million) of which 5,800 in Finland. Over one half of Tieto’s turnover bUSINESS OpErATIONS AND is generated by project and application STrATEGY management services. Project services Chairman of the Tieto is an IT service company, providing incorporate services involving the design board of Directors: information technology, product deve- and implementation of and consultancy Markku Pohjola lopment and consultancy services. The in new information technology solutions company is one of the largest IT service as well as the development and integra- companies in Northern Europe and a tion of existing solutions. Project duration president & CEO: global market leader in selected segments. varies considerably, and the business Hannu Syrjälä Tieto aims to become the leading IT operation is characterised by cycles that service company in Northern Europe by follow the general economic trends.

30 PORTFOLIO

operating centres, the numbers of cost levels. The company aims to exerting pressure. With a view to employees have risen by 31 per cent increase the offshoring degree to 35 per maintaining its competitive edge, Tieto from last year’s figure, to total more cent in 2010. At the end of June the is investing heavily in increasing its than 5,700. Increasing human resources figure stood at 34 per cent. offshoring operations; the target is in these offshoring countries is essential, Thanks to efficiency measures, Tieto 40 per cent in 2011. in order to safeguard competitiveness. has managed to steer its downturn-hit In geographical terms, Tieto will The shift in personnel decreases profitability onto a growth path. In the focus operations on Finland, Sweden turnover because of the lower invoice first half of 2010, the company’s opera- and Russia. The company will also levels, but conversely it boosts relative ting margin (4.5 per cent) improved continue to reorganise the International profitability thanks to the reasonable from the previous year’s figure, but it segment. level of costs. was still substantially weaker than The company has a long-term Tieto’s most significant customer before the downturn. customer base and a strong market clusters are in the finance and telecom- Finnish business brought in a position in the Finnish IT service markets munications and media sectors. In aggre- reduced turnover and the operating and it has a good competitive edge. gate they produce a good half of the profit remained at the 2009 level. In In Sweden, Tieto has made efficiency turnover. Other important sectors Sweden, turnover decreased in the local measures and continues to seek include healthcare, along with the rest currency, but profitability maintained its profitable growth. The IT service market of the public sector, forest industry and positive trend. The loss suffered by the remains very fragmented in Sweden. the energy sector. International segment was considerably In Solidium’s view Tieto has the smaller than before. potential for profitable development rECENT DEVELOpMENTS Tieto sold two of its foreign units, in in its selected areas. Russia offers Tieto’s turnover in the first half of 2010 France and the United States, in 2010. especially promising opportunities for was around three per cent less than in This was part of the reorganisation growth, because the Russian information the previous year, due to the slower measures targeting the International technology market is still undeveloped than expected recovery of the IT service segment, which were announced by the and the outsourcing of IT services is market as well as the divestment of company earlier. limited. some business operations. The forecast Tieto has a strong balance sheet, for market growth in the rest of the SOLIDIUM’S VIEW and gearing is considerably below the year is modest. Competition will continue to be tough target rate of 40 per cent. This allows Tieto’s mean unit prices continued in the IT service markets. In the telecom the company to make the strategic to decrease with a continuing shift of R&D, in particular, companies operating investments in growth and acquisitions manpower to countries with favourable efficiently at low cost levels will be in the core market areas.

SHARE PRICE DEVELOPMENT KEY INDICATORS EUR million 1–6/2010 2009 2008 EUR Turnover 854 1 706 1 866 40 35 Operating profit 38 108 150 30 Operating profit, % 4.5 6.3 8.0 25 Net profit 24 80 88 20 Return on equity 14% 16% 18% 15 Return on investment 21% 16% 19% 10 Equity ratio 48% 46% 41% 5 0 Gearing 17% 13% 21% Earnings per share (EUR) 0.33 1.13 1.23

1.1.2005 1.1.2006 1.1.2007 1.1.2008 1.1.2009 1.1.2010 Market value 971 1 036 557 Balance sheet total 1 172 1 195 1 255 Tieto BE500 Computer service index The development of the sector index has been normalised with reference to Number of employees 16 885 16 663 16 618 the company share. Profit distribution 36 36 Profit distribution to Solidium Dividends are indicated under the financial period whose financial statements have been used as the basis for dividend payments. BREAKDOWN OF TURNOVER MAJOR SHAREHOLDERS, 30 JUNE 2010 Finland, 48% Number of Proportion of shares Sweden, 25% shares and votes, (%) Other countries, 27% Solidium Oy 7 415 418 10.3 Cevian Capital * 4 969 385 6.9 Swedbank Robur Funds 3 702 584 5.1 Ilmarinen 2 564 367 3.6 OP Pohjola Group 2 545 504 3.5 * Based on the situation as at 15.3.2010.

31 of customers is concerned about the environmental effects. Furthermore, thanks to easier handling properties, waterborne paints are far more user- friendly than oil-based paints. Last year, Tikkurila changed its organisational structure. The changes aim to streamline the operation and promote smooth cooperation between the different segments and support functions. The new organisational model is expected to optimise opera- Tikkurila Oyj tions in 2010. Tikkurila continues to develop the new shop-in-shop concept, which has already proved its effective- Tikkurila’s strategy focuses on paint ness. The operating model emphasises Solidium's holding (%) 14.7 brands for consumers. The company competence throughout the sales has a strong geographical focus on channel as well as the ability of the Weight in Solidium's equity portfolio (%) Scandinavia and Eastern Europe as well sales personnel to recommend the most 1.3 as Russia. It also supplies products to effective solution to meet the customer’s Market value of holding as at 30.6.2010 industrial users. needs. Tikkurila’s prime distribution 100 (EUR million) Tikkurila’s strategic goal is to be the channels are hardware stores and other Profit distribution most prominent operator in its selected outlets for building material. to Solidium, market areas. The company puts strong Tikkurila opened a new logistics and - 1.7.2009–30.6.2010 emphasis on instructional customer customer service centre in Mytishchi, (EUR million) service at the point of sale. To this end, near Moscow, last year. Sales, sales personnel undergo continuous training. This is justified since customers bUSINESS OpErATIONS AND do not necessarily have the most up-to- STrATEGY date product information because, Tikkurila provides consumers, professio- compared with other consumer Chairman of the nals and industrial users with user- products, paints are not purchased board of Directors: friendly, environmentally sustainable on a regular basis. Jari Paasikivi solutions for the protection and decora- Tikkurila’s product development tion of various surfaces. Tikkurila was concentrates on developing user- and established in 1862 and it was part of the eco-friendly paints and other coatings. president & CEO: Kemira Group until 2010. Tikkurila has The majority of Tikkurila’s products are Erkki Järvinen production facilities in seven countries waterborne, which minimises the impact and sales companies in 18 countries. on the environment. A growing number

32 PORTFOLIO

marketing and warehousing, covering Despite the positive trend evidenced shareholders. Thus Tikkurila, a newly the entire Moscow region, are centralised in early 2010, Tikkurila remains cautious listed company, obtained an extensive in one location. At the end of 2009, about the near future in its main market shareholder base. Kemira retained a new production line for waterborne areas. The revival in the construction a 14 per cent holding in Tikkurila. paints was opened in St Petersburg. As and renovation markets has not yet a result of the new production facilities, fully translated into demand for paint SOLIDIUM’S VIEW Tikkurila’s waterborne paint production products. In economically uncertain Tikkurila is a growth company that is is now concentrated in one location, and times the significance of brand names in an interesting phase of development. this has increased production capacity increases in the marketplace. The com- Its target markets in Russia and Eastern significantly. There are plans to further pany forecasts higher turnover and Europe offer significant potential for develop production in the St Petersburg result year-on-year. However, challenges growth. The company’s continuing area. The measures are proof of Tikkuri- faced in obtaining raw materials as well growth is supported by the widening of la’s commitment to invest in emerging as raw material price pressures may put the middle classes, migration of demand markets. a damper on the company’s current to products of higher quality and price positive development. and the increasing buying power in the rECENT DEVELOpMENTS Consumers make up Tikkurila’s most developing markets. Tikkurila has a The early months of 2010 have been important customer group. Consequently, strong domestic ownership base, which evidence of slowly recovering demand changes in consumers’ buying power has the capacity to bolster the future after the previous year’s difficult market and consumption habits are reflected in growth of the company. conditions caused by the financial crisis, the demand for the company’s products. Tikkurila’s challenge consists of which were particularly keenly felt in In the Russian markets, in particular, maintaining its market leadership in the eastern growth markets. Despite the factors supporting a recovery in demand strengthening local and international rising raw material prices, the company’s include the rise in the export prices of competition, not least in the developing profitability at the start of the year was raw materials (mainly oil), the renewed markets. Maintaining and developing better than expected. Tikkurila’s financial availability of financing as banking the brands will require increasing result is strongly influenced by the operations stabilise and stronger investment in marketing and in the currency markets, as well, with the domestic demand. competence of the sales network. exchange rate between the euro and the In March 2010, Tikkurila was spun On the other hand, Tikkurila’s current Russian rouble and the Swedish krona off from Kemira Group to acquire a production capacity can handle signifi- of particular importance. A significant listing on NASDAQ OMX Helsinki. The cant increases in sales without a need proportion of Tikkurila’s profit is gene- spin-off was executed by distributing for additional investment. rated in the outdoor painting season. Tikkurila shares as dividends to Kemira

SHARE PRICE DEVELOPMENT KEY INDICATORS EUR million 1–6/2010 2009 2008 EUR Turnover 302 530 648 18 16 Operating profit 37 50 59 14 Operating profit, % 12.1 9.4 9.1 12 Net profit 24 30 37 10 8 Return on equity 26% 37% 6 Return on investment 19% 17% 19% 4 Equity ratio 34% 36% 20% 2 0 Gearing 87% 90% 208% Earnings per share (EUR) 0.55

1.4.2010 1.5.2010 1.6.2010 Market value 679 26.3.2010 Balance sheet total 522 403 428 Tikkurila Euro STOXX Construction & Materials Number of employees 3 946 3 538 3 867 The development of the sector index has been normalised with reference to Profit distribution the company share. Profit distribution to Solidium Dividends are indicated under the financial period whose financial statements have been used as the basis for dividend payments. BREAKDOWN OF TURNOVER MAJOR SHAREHOLDERS, 30 JUNE 2010 Finland, 20% Number of Proportion of shares Other Nordic countries, 30% shares and votes, (%) Russia and other CIS countries, 31% Oras Invest Oy 6 483 404 14.7 Rest of Europe, 19% Solidium Oy 6 474 021 14.7 Kemira Oyj 6 175 155 14.0 Varma 3 796 459 8.6 Ilmarinen 2 370 823 5.4

33 | ANNUAL REPORT 2010

Board of Directors

34 BOARD OF DIRECTORS

1. KEIJO SUILA, CHAIrMAN 4. ANTTI HErLIN Pension Insurance Company, Deputy born 1945, BSc (Econ. and Bus. Adm.), born 1956, DSc (Econ) h.c., D. Arts h.c. Chairman of the Board, 1990–2009 Vuorineuvos (Finnish honorary title) 2003–present Kone Corporation, member of the Economic Council of 1999–2005 Finnair Plc, President and Chairman of the Board, 1996–2006 Finland CEO, 1992–1998 Huhtamäki Oyj, Deputy Kone Corporation, President & CEO, Managing Director, 1988–1998 Leaf 1996–2003 Kone Corporation, Deputy 6. MArKETTA KOKKONEN Corporation, Managing Director, Chairman of the Board, 1991–present born 1946, MA 2008–present FINNEXPO, Chairman Kone Corporation, board member, 1995–2010 City of Espoo, Mayor, 1992– of the Board, 2006–present: Nokia 2007–2008 Confederation of Finnish 1995 Vihti municipality, Mayor, 1991– Corporation, board member, 2001– Industries, Chairman, 2005–2006 Fed- 1992 Savings Banks service companies, 2009 Kesko Corporation, board eration of Finnish Technology Industries, Head of Department, 1988–1990 SKOP, member (2006–2009 Vice Chairman Chairman, 1996–present Federation of Head of Department, 1986–1987 Finnish of the Board), 2000–2006 Elisa Finnish Technology Industries, board Real Estate Bank, Head of Department, Corporation, Chairman member, 2004–present YIT Corporation, 2005–present FCG Finnish Consulting board member, 2004–present Ilmarinen Group Ltd, board member 2. EIJA AILASMAA, VICE CHAIrMAN Mutual Pension Insurance Company, born 1950, MSc (Pol. Sc.) Deputy Chairman of the Supervisory 7. ANNI VEpSÄLÄINEN 2003–present Sanoma Magazines B.V., Board born 1963, MSc (Eng) President & CEO, 2001–2003 Sanoma 2009–present Diacor Oy, Managing Magazines Finland Ltd, CEO, 5. LAUrI IHALAINEN Director, 2006–2008 HRM Partners 2000–2001 Helsinki Media, CEO, Born 1947, Minister Ltd., Managing Director, 2003–2005 2010–present Outotec Oyj, board 1990–2009 The Central Organisation of TeliaSonera Finland Oyj, Managing member, 2004–present Huhtamäki Oyj, Finnish Trade Unions – SAK, President, Director, 1987–2003 Sonera Oyj and board member 1970–1990 The Central Organisation of TeliaSonera Oyj, various management Finnish Trade Unions – SAK, positions 3. JOUNI HAKALA 2009–present VR Group Ltd, board born 1961, LL.M, MBA member, 1988–2009 Ilmarinen Mutual Lagman Pekka Merilampi acts as 2008–present Finnish Industry Secretary to the Board. Investment Ltd, Fund Director, member of Management Group, 2007–2008

Special Adviser to the Minister, Owner- 3 5 6 1 7 2 4 ship Steering Department, 2005–2007 European Investment Fund, Deputy Head of Equity Investments, 2003– 2005 European Investment Bank Group, Adviser to Vice President

35 | ANNUAL REPORT 2010

Personnel

36 PERSONNEL

1. KArI A. J. JÄrVINEN, Visiting Scholar, Wharton Business 8. pEKKA TÖLLI, ANALYST MANAGING DIrECTOr School, 1995–1996 Kera Oy, Develop- born 1983, MSc (Econ) born 1962, MSc (Eng), MBA ment Manager, 1991–1994 Sitra, the 2006–2009 Deloitte Corporate Finance 2003–2007 Mandatum & Co Oy, Finnish Innovation Fund, Industry Oy, Associate, 2006 Pöyry Capital Ltd, Managing Director, 1995–2003 Analyst, 2006–2010 Seed Fund Vera Summer Analyst. Mandatum Bank Oy and Mandatum & Ltd, board member, 2000–2004 Naps Co Oy, Director, 1992–1995 McKinsey & Systems Ltd, board member, 2000– 9. TIITTA HELSTELÄ, Company, Consultant, 1987–1991 2002 Uniglass Engineering Oy, board FINANCIAL ASSISTANT Sanoma Group, Development Manager. member, 1996–2002 MAP Medical born 1966, MSc (Econ) Technologies Oy, board member, Previous employment: Nokia Corporation, 2. TApANI VArJAS, 2001–2008 Finnish Venture Capital Deutsche Lufthansa AG CHIEF LEGAL COUNSEL Association, board member. born 1970, LL.M 10. HELENA LArSSON, 2003–2009 Aventum Partners Ltd, 5. pETTEr SÖDErSTrÖM, ADMINISTrATIVE ASSISTANT Chief Legal Counsel, 2001–2003 Man- INVESTMENT DIrECTOr born 1977, MSc (Pol. Sc.) datum & Co Oy, Chief Legal Counsel, born 1976, MSc (Econ) Previous employment: McKinsey & 1998–2000 Mandatum Bank Oy, Assis- 2008–2009 Leimdörfer Finland Oy, Company, Marimekko Corporation tant Director, 1997–1998 Mandatum & Partner, 2002–2008 Mandatum & Co Co Oy, Analyst, 1996–1997 Law Office Oy, Partner, 2000–2002 Pricewater- 11. NOOMI LEHTOSAArI, Heikki Haapaniemi Oy, Associate. houseCoopers Oy, Senior Associate. EXECUTIVE ASSISTANT born 1982, MSc (Pol. Sc.) 3. EEVA AHDEKIVI, 6. pAULI ANTTILA, ANALYST Previous employment: Ministry of INVESTMENT DIrECTOr born 1984, MSc (Econ) Defence born 1966, MSc (Econ) 2007–2009 Deloitte Corporate Finance 2007–2009 Ownership Steering Oy, Associate, 2006 Helsinki School of Department, Prime Minister’s Office, Economics, Department of Accounting Senior Financial Analyst, 2004–2006 and Finance, various duties. Pohjola Asset Management Ltd., Director, 1997–2004 Conventum Ltd, 7. MIKKO HOLOpAINEN, ANALYST Partner, 1988–1997 Merita Bank/KOP, born 1978, MSc (Econ) various positions, 2009–present 2005–2009 Pohjola Corporate Finance 7 8 Tikkurila Oyj, board member, 2008– Ltd, Analyst, 2003–2005 Deloitte 4 6 2009 Patria Plc, board member. Spain, Junior Analyst. 1 10 3 4. ANNArEETTA LUMME-TIMONEN, 2 5 9 INVESTMENT DIrECTOr born 1967, MSc (Eng), DSc (Tech) 11 2000–2007 3i Nordic plc, Investment Manager, 1997–2000 SFK Finance Oy, Investment Manager, 1995 & 1997

37 | ANNUAL REPORT 2010

Corporate governance

SOLIDIUM’S COrpOrATE of national importance. The goal of the Articles of Association contain regula- GOVErNANCE SYSTEM company’s activities is to increase share- tions concerning matters that must be holder value in the long term and to handled by the General Meeting. General make economically sound investments. In addition to the matters belonging Solidium is a limited company that is Solidium complies with the Compa- to the General Meeting in accordance wholly-owned by the State of Finland. nies Act, the Securities Market Act, with the Companies Act, according to Its mission is to strengthen and stabilise other legislation and regulations issued the Articles of Association, the General Finnish ownership in nationally important based on them in all of its operations. In Meeting companies and to increase the value of accordance with the Companies Act and • decides on the principles that the its holdings in the long-term. Solidium’s the Articles of Association, Solidium’s company follows when disposing of Articles of Association state that the corporate governance has been organised its property or acquiring new shares company’s field of operation comprises between the Annual General Meeting, or other property, and determines ownership and management of shares the Board of Directors and the Managing the Board of Directors’ authorisations in operating in Finland and the exercise Director. Solidium’s operations comply concerning these of shareholders’ rights in them based with the general ownership steering • confirms the principles of good on its ownership. Solidium invests in principles confirmed by the Finnish corporate governance that the companies that are considered to be Government. company complies with when operating as a shareholder of listed General meeting companies At Solidium, the highest power of deci- • decides on the company’s reporting sion is vested in the General Meeting. obligation and other communications The Companies Act and Solidium’s to its owner.

Annual general meeting 2009 The 2009 Annual General Meeting of Solidium was held in Helsinki on 30 October 2009. The Annual General Meeting adopted the company’s financial statements for the financial period 1 May to 30 June 2009 and discharged FINNISH GOVERNMENT the members of the Board of Directors Operational framework

CABINET COMMITTEE ON ECONOMIC POLICY

MINISTER IN CHARGE

BOARD OF DIRECTORS OF SOLIDIUM OY Operational decision-making

SOLIDIUM’S SOLIDIUM OY’S MANAGEMENT MANAGEMENT MODEL Preparation of operations

38 CORPORATE GOVERNANCE

and the Managing Director from liability. accordance with the Companies Act and eight members. A person who has The General Meeting resolved, in the Articles of Association. turned 68 may not be elected to accordance with the proposal of the In accordance with the Companies become Chairman, Vice Chairman or Board, that no dividend be paid for the Act, the Board of Directors is responsible a member of the Board. The Board of financial period. for the proper management of the Directors constitutes a quorum if more It was confirmed that the Board of operations and administration of the than half of its members are present Directors shall have seven members. company. The Board shall ensure that at a meeting. The following persons, who gave their the company’s accounting and asset During the financial period, the consent, were elected to the Board of management are properly organised. Board of Directors did not appoint Directors until the end of the next The Board of Directors has approved any committees. After the end of the Annual General Meeting: Chairman Keijo a charter defining its principles of opera- financial period, the Board of Directors Suila, Vice Chairman Eija Ailasmaa and tion, according to which the Board must appointed a Compensation Committee regular members Jouni Hakala, Antti attend, among other things, to the composed of Keijo Suila (Chairman), Herlin, Lauri Ihalainen, Marketta Kokko- following tasks: Eija Ailasmaa and Jouni Hakala. nen and Anni Vepsäläinen. All of the • deciding on the company’s business The Managing Director and the Board members are independent of the strategy, within the limits of the Chief Legal Counsel participated in the company and its shareholder. Pekka authority granted by the owner meetings of the Board of Directors as Merilampi shall act as the secretary of • deciding on Solidium’s acquisitions the presenters of agenda items. The the Board of Directors. or disposals and in the role of share- members of Solidium’s Management The Annual General Meeting con- holder of the restructuring of its Team may participate in the meetings, firmed that the Chairman of the Board portfolio companies if necessary, as presenters of agenda of Directors shall receive a fee of EUR • approving the company’s annual items. 5,500 per month, the Vice Chairman budget EUR 3,000 per month and the members • being responsible for the appropriate board work 2009–2010 EUR 2,500 per month. In addition, a fee organisation of operations The key areas of the Board’s work of EUR 600 was confirmed for each • deciding on the capital structure included supervising the organisation of meeting. required by the company’s business Solidium’s operations, approving stra- The firm of authorised public operations tegy and investment strategy, analysing accountants KPMG Oy Ab, with APA • confirming the principles of risk potential new investments, securing Sixten Nyman as the principal auditor, management financing for new investments, deciding was appointed as Solidium Oy’s auditor • supervising the company’s solvency, on investing in companies in which to serve for a term ending at the end of profitability, and liquidity Solidium has a holding and in new port- the next Annual General Meeting. The • electing and discharging the com- folio companies, and making decisions Annual General Meeting resolved to pany’s Managing Director and deci- concerning the corporate transactions remunerate the auditors in accordance ding on the terms and conditions of of companies in which Solidium has a with their invoice. his or her employment relationship holding. The Board of Directors convened board of directors According to the Articles of Associa- ten times during the financial period and The tasks and responsibilities of the tion, the Board of Directors consists of the attendance rate of Board members Board of Directors are determined in a minimum of three and a maximum of was 96 per cent.

39 | ANNUAL REPORT 2010

Managing director INTErNAL SUpErVISION AND rISK As part of the organisation of inter- The Managing Director attends to the MANAGEMENT nal supervision and risk management, day-to-day administration of the com- the company’s Board of Directors pany in compliance with the instructions Internal supervision regularly monitors the company’s and regulations determined by the The objective of internal supervision is operational result, the development Board. The Managing Director shall to ensure that the company’s key objec- of the market value of investments provide the Board and its members with tives are achieved; the assessment of and risks arising from the company’s the information needed for Board work. the achievement of objectives is largely operations, and decides on reporting, The Managing Director may adopt based on reports obtained from busi- procedures and benchmarks measuring measures that are uncommon or far- ness operations. The Managing Director quality and quantity, with which the reaching in view of the size and quality and the Management Team play a efficiency and profitability of operations of the company’s operations only if the crucial role in generating reports. In the are measured. The Board of Directors Board has granted prior authorisation company’s business operations, internal is also responsible for ensuring the for such action. supervision is continuous and forms a liquidity and funding necessary for The Managing Director of Solidium part of daily routine, which is used to the company’s operations. is Kari Järvinen. ensure that operations are in line with The company’s Board of Directors, the company’s objectives. Managing Director and Management Management team Internal supervision is carried out Team are assisted by external auditors The company’s Management Team using several different methods, such as in ensuring that internal supervision consists of the Managing Director, the management, organising operations and is adequate and, in particular, that Investment Directors and the Chief organisational culture, identifying and financial information is correct. Legal Counsel. assessing risks, continuous supervision, The company’s Chief Legal Counsel reporting and communication of risk management acts as the compliance officer and the information, and monitoring and audits. The company’s internal and external person in charge of insider issues. The Internal supervision procedures are risks that may adversely affect the Chief Legal Counsel participates in directed at all crucial operations and achievement of business objectives are monitoring the operations of portfolio cover all crucial processes and even identified and assessed on a regular companies and in projects concerning individual tasks. The scope and nature basis. Risk management identifies the potential new investment targets. of the company’s operations are taken threats and opportunities that affect The company’s Investment Directors into consideration when defining the the implementation of strategy. The monitor designated portfolio companies, procedures. objective of risk management is to report on developments in their strate- The Board of Directors of Solidium support the achievement of objectives gies, business and financial situation is responsible for organising and main- set in strategy by making sure that the and participate in projects concerning taining adequate and well-functioning risks taken are proportionate to the designated portfolio companies and in internal supervision. The company’s company’s risk-bearing capacity and that analysing new investment targets. Board of Directors makes sure that the continuity of operations has been In addition, appointed members of internal supervision functions well and adequately ensured. the Management Team are responsible is adequate and, based on observations The Chief Legal Counsel, who is for, among other things, the company’s obtained through internal supervision, responsible for ensuring that regula- financial administration, financing, makes sure that the principles concer- tions are met, works as part of the risk investment of cash flows, communica- ning the organisation of operations management function. The Chief Legal tions and corporate responsibility are met and that control within the Counsel’s task is to assist the company’s issues. company is functioning well. Board of Directors and active management

40 CORPORATE GOVERNANCE

in managing the risk of non-compliance The auditors annually supply and members of the Board of Directors with regulations. the Annual General Meeting with an consists of a fixed monthly salary and The company does not have a auditor’s report, in which they provide meeting fees, which are paid in cash. separate internal supervision and risk a statement on the content of the The Board of Directors decides on management organisation that is inde- financial statements, the proposal the remuneration and other terms and pendent of business operations. In for the distribution of profits and the conditions of the employment relation- cooperation with the Chairman of the discharge from liability. In addition, the ship of the Managing Director. The company’s Board of Directors, the auditors prepare audit memos based remuneration of the Managing Director Managing Director and the Investment on their observations. If necessary, the consists of a fixed monthly salary and Directors, the company’s Chief Legal auditors may provide oral reports at a performance bonus of a maximum of Counsel organises the monitoring of meetings of the Board of Directors and 40 per cent of the fixed salary paid the company’s operational and financial General Meetings. during the year of evaluation. The retire- objectives, makes sure that management age of the Managing Director is ment information is correct and internal Internal audit 63 years. The Managing Director has a regulations are followed, and identifies Taking into account the scope of the supplementary pension equivalent to and assesses key risks related to busi- company’s business operations, the 30.3 per cent of the Managing Director’s ness operations. company does not have a separate annual remuneration. The Managing internal audit function. Director has a period of notice of nine External supervision months on the company’s part and six According to Solidium’s Articles of INSIDEr ADMINISTrATION months on the Managing Director’s part Association, the Annual General Meeting Solidium complies with the insider and and is entitled to a severance payment must elect one auditor for inspecting trading guidelines approved by the equal to the total salary for 12 months. the company’s accounting, financial company’s Board of Directors. The Board of Directors decides on statements and corporate governance, All securities transactions carried the remuneration of the Management and the auditor must be a firm of out by personnel require permission. Team. The remuneration of the Manage- authorised public accountants certified Shares owned by the personnel are ment Team (excluding the Managing by the Central Chamber of Commerce recorded in a permanent non-public Director) consists of a fixed monthly of Finland. The term of the auditor shall insider register. salary and an annual performance bonus expire at the end of the Annual General The company keeps separate of a maximum of 40 per cent of the Meeting following the election. non-public project-specific registers fixed salary paid during the year of The auditors’ task is to inspect for projects that contain insider evaluation. the company’s accounting, financial information. The remuneration of other Solidium statements and corporate governance personnel consists of a fixed monthly in order to ensure that the operations rEMUNErATION salary and an annual performance bonus of the company and its administrative Solidium complies with the applicable of a maximum of 40 per cent of the bodies comply with the law, and that guidelines issued by the Cabinet Com- fixed salary paid during the year of financial statements have been prepared mittee on Economic Policy regarding the evaluation. in accordance with valid rules and executive management remuneration regulations and provide shareholders and pension benefits in state-owned and other stakeholders with sufficient companies. information on the result of the com- The General Meeting decides on pany’s operations and the company’s the remuneration paid to the Board of financial position. Directors. The fee paid to the Chairman

41 | ANNUAL REPORT 2010 Corporate responsibility

Corporate responsibility refers to a company’s responsibility for the effects of its operations on the surrounding society, environment and stakeholders. Corporate responsibility is often divided into three areas: financial, social and environmental responsibility. From the owner’s and investor’s point of view, sound corporate governance is also an important part of corporate responsibility.

Solidium believes that a high-quality a financial, environmental and social FOCUSES OF SOLIDIUM’S COrpOrATE corporate responsibility policy is one of responsibility within their own rESpONSIbILITY WOrK AS AN OWNEr the prerequisites for running successful operating environments. AND INVESTOr: business operations and generating 1 Being informed – as an owner and long-term financial value. Good manage- SOLIDIUM’S COrpOrATE investor, Solidium identifies and manages ment of corporate responsibility mat- rESpONSIbILITY VISION corporate responsibility matters related ters also provides efficient risk manage- Solidium’s vision is to be a progressive, to its investment activities ment. professional and responsible owner that 2 As an owner, Solidium identifies and Solidium is a long-term investor that implements corporate responsibility on defines the crucial corporate responsibility matters of its portfolio brings stability to the ownership of a long-term basis and in a way that companies nationally important companies through increases value. Solidium wishes to 3 As an active owner, Solidium influences its own activities. It is important to develop its know-how in and attitude the corporate responsibility matters of Solidium that the companies in which towards corporate responsibility matters its portfolio companies in such a way it has a holding act responsibly and bear to a level that is appreciated by its that their corporate responsibility work generates value for Solidium as an owner stakeholders. 4 Solidium promotes the role of responsible owner in corporate FOCUSES OF SOLIDIUM’S responsibility matters COrpOrATE rESpONSIbILITY WOrK Solidium’s corporate responsibility work is divided into two main points of view: Solidium as an owner and investor and FOCUSES OF SOLIDIUM’S COrpOrATE Solidium as a company and employer. rESpONSIbILITY WOrK AS A COMpANY AND EMpLOYEr:

1 Solidium's corporate responsibility follows an integrated operating model in which corporate responsibility matters have been included in the company's normal operations

2 Solidium identifies and analyses the expectations of its key stakeholders

3 Solidium reports on its corporate responsibility matters regularly both as an owner and as a company

4 Solidium pays attention to the corporate responsibility of service providers and affiliates

5 Solidium is a responsible employer that attends to the well-being of its personnel

42 CORPORATE RESPONSIBILITY

Several of Solidium’s portfolio responsibility matters. The Managing Since Solidium is a long-term inves- companies are major companies with Director, together with the Manage- tor, it is not typical for it to dispose of international operations, whose corpo- ment Team, is in charge of corporate its ownership due to potential corporate rate responsibility matters are extensive responsibility work. The company’s responsibility challenges facing its port- and multi-faceted. Each company is personnel, each in their own capacity, folio companies. Instead, it is more assessed from the point of view of its are responsible for the practical imple- important for Solidium to present its sector and its geographical operating mentation. The Investment Directors view as an owner, which is based on an environment. As a general rule, and analysts review the corporate understanding and analysis of corporate Solidium’s portfolio companies are responsibility matters of the portfolio responsibility matters. With regards to responsible companies. Several of them companies for which they are responsi- potential new portfolio companies, have been recognised for their corporate ble. Solidium’s entire personnel have Solidium evaluates the importance of responsibility work that was among the participated in the planning of the com- corporate responsibility matters and the best in their sector, and have been listed pany’s corporate responsibility work. level of their management as part of its on the equity indexes of responsible preparation for an investment decision. companies. SpECIAL FEATUrES IN SOLIDIUM’S Solidium complies with legislation COrpOrATE rESpONSIbILITY SOLIDIUM’S COrpOrATE and sound corporate governance when MATTErS rESpONSIbILITY WOrK HAS bEEN evaluating the corporate responsibility Solidium is the largest or one of the COMMENCED matters of its portfolio companies. largest shareholders of the companies Solidium started its corporate responsi- The objective of the listed companies it invests in, and therefore it has a good bility work during its first full financial in which Solidium has a holding is to opportunity to have its views regarding period of 2009–2010. The company operate in a financially profitable corporate responsibility matters heard. has defined the focuses and content of manner, and therefore they cannot be However, in all of its portfolio compa- corporate responsibility work and iden- expected to bear a different set of social nies, Solidium is a minority shareholder tified the key corporate responsibility obligations from other companies. whose views are the views of a single matters of its portfolio companies. investor. Measures and implementation time- COrpOrATE rESpONSIbILITY Solidium strives to influence the tables were defined for each area of MATTErS AS pArT OF SOLIDIUM’S corporate responsibility matters of its focus. Solidium has also prepared a OpErATIONS portfolio companies using the means background study on the best corporate With respect to corporate responsibility available to an active owner. This is responsibility practices in its operating matters, Solidium implements an inte- done in cooperation with other share- environment and reference group to grated operating model in which corpo- holders, utilising suitable and effective form the basis for its own work. rate responsibility matters have been channels. During the 2010–2011 financial included in the company’s normal One of the hallmarks of Solidium’s period, Solidium will prepare a more operations. In the management of corporate responsibility work is the aim extensive and long-term corporate the investment portfolio, corporate towards extensive and active dialogue responsibility work action plan. Solidium responsibility matters form a crucial with various stakeholders. The corpo- will report on the progress of its corpo- examination and analysis point of view. rate responsibility matters of portfolio rate responsibility work in its Annual The company’s Board of Directors is companies are managed interactively Reports and on its website. responsible for Solidium’s corporate with the companies.

43 | ANNUAL REPORT 2010

Financial statements 2009–2010

44 FINANCIAL REPORTING

report of the board of Directors for the period 1 July 2009–30 June 2010

The financial period from 1 July 2009 to 30 June 2010 was the through the shareholders’ nomination committee. In Solidium’s second of Solidium Oy. The length of the previous financial view, Tieto has good potential for profitable growth in the period from 1 May to 30 June 2009 was two months, and areas specified in its strategy. therefore the figures in the income statement are not In June 2010, Solidium sold 100 Rautaruukki Corporation comparable. shares for approximately EUR 1,300. The sale was made in Solidium Oy owns and manages shares in companies order to clarify Solidium’s tax position. In Solidium’s view, the operating in Finland and exercises shareholder rights in them shares owned by it should, for taxation purposes, be classified based on its ownership. Solidium invests in companies that as fixed assets in accordance with Section 12 of the Business are considered to be of national importance. The goal of the Income Tax Act. This asset type classification will have a company’s activities is to increase shareholder value in the crucial effect on the tax treatment of capital gains. long term and to make economically sound investments. At the close of the financial period on 30 June 2010, During the financial period, the Board of Directors of Solidium Solidium held shares in eleven listed companies: Elisa Corpora- confirmed the company’s mission, vision, values, objectives tion, Kemira Oyj, Metso Corporation, Outokumpu Oyj, Rauta- and investment strategy and criteria, which are described in ruukki Corporation, Sampo plc, Sponda Plc, Stora Enso Oyj, more detail in Solidium’s Annual Report and on its website. TeliaSonera AB, Tieto Corporation and Tikkurila Oyj. During The areas of focus during the financial period were on the the financial period, Solidium received EUR 458 million in management of existing holdings, preparing business sector profits distributed by the companies in which it owns shares, reviews and examining the projects of portfolio companies of which cash dividends accounted for EUR 299 million, repay- as well as new investments. Solidium is wholly-owned by ments of equity for EUR 57 million and dividends paid in the the State of Finland. form of Tikkurila shares for EUR 102 million. The repayments In December 2009, Kemira Oyj organised a share issue of equity are recorded against the cost of acquisition and have with pre-emptive rights, with which it raised about EUR 200 no effect on reported profits. million in new capital. The funds obtained in the share issue During the financial period, the Chairman of the Board of will enable the company to carry out its growth strategy, Directors and the Managing Director of Solidium participated, to spin off Tikkurila Oyj flexibly and to strengthen Kemira’s as part of the nomination committees, in the preparation of balance sheet. Solidium exercised its pre-emptive subscription proposals concerning the members of the Boards of seven right in Kemira’s share issue in full, subscribing for new Kemira portfolio companies and their remuneration. A total of 13 new shares in accordance with its holding, for a total of EUR 34.6 members were elected to the Boards of companies in which million. In addition, the four largest shareholders of Kemira, Solidium owns shares (excluding Tieto Corporation and including Solidium, gave an underwriting commitment in Tikkurila Oyj) in spring 2010, of whom 5 were women connection with the share issue. Since the share issue was (38 per cent). fully subscribed, the underwriting commitment was not Solidium’s investments are equity investments and money enforced. Following the share issue, Solidium owns market investments. At the close of the financial period, the 25,896,087 Kemira shares, and its ownership in the company market value of the equity investments was EUR 7,914 million is 16.67 per cent of shares and votes. In March 2010, Kemira and the value of money market investments was EUR 358 distributed 86 per cent of Tikkurila’s shares to Kemira share- million. Solidium’s investments yielded 34.6 per cent over holders, in order to facilitate the spin-off and stock exchange the period. Equity investments yielded 35.1 per cent, compared listing of the paints manufacturer. With its 14.68% ownership, to a rise of 31.8 per cent in the OMX Helsinki Cap GI index. Solidium became Tikkurila’s second largest shareholder. Money market investments yielded 0.4 per cent. The com- Solidium owns 6,474,021 Tikkurila shares, which an acquisition pany’s net asset value increased by 28 per cent during the cost of EUR 102 million. financial period, from EUR 6,042 million to EUR 7,715 million. During the financial period, Solidium became Tieto Corpo- Personnel expenses amounted to EUR 2.1 million (EUR 0.3 ration’s largest shareholder. Solidium acquired 5.0 per cent of million). The biggest items in other operating expenses, which Tieto’s shares in April 2010. In May-June, Solidium increased amounted to EUR 1.5 million (EUR 0.7 million), were admini- its ownership in Tieto to 10.3 per cent, raising the amount stration expenses and costs for facilities. The company’s invested by Solidium in Tieto shares to about EUR 116 million. opera ting loss was EUR 3.7 million (EUR 1.1 million). Financial Tieto is a company that fulfils Solidium’s investment criteria income, which totalled EUR 401.9 million (EUR 0.4 million), well. Solidium’s objective is to develop Tieto together with mainly consisted of dividend income (EUR 401.0 million) and other shareholders to increase its shareholder value, and to interest income from money market investments (EUR 0.9 participate in the election of Tieto’s Board of Directors million). Financial expenses, totalling EUR 0.9 million (EUR 0.0

45 | ANNUAL REPORT 2010

million), consisted of fees related to a EUR 300 million fee of EUR 600 is paid per meeting attended. The monthly revolving credit facility agreement. Profit for the period was and meeting fees paid to the members of Solidium’s Board of EUR 397.3 million (EUR 0.7 million). Directors totalled EUR 303,000 (EUR 51,700). The Board The largest item in Solidium’s non-current assets is the convened 10 times during the financial period and the equity portfolio, with a cost of acquisition totalling EUR 5,782 attendance rate of its members was 95.7 per cent. million (EUR 5,587 million). Investments, totalling EUR 151 Solidium’s Board of Directors has a written charter. It million (EUR 81 million), consisted mainly of share acquisitions. complements the Board’s duties as set forth in the Companies At the end of the financial period, Solidium’s liquid assets Act and in the Articles of Association by specifying that were EUR 358 million (EUR 153 million) and the balance sheet Solidium’s Board decides on the company’s business strategy total was EUR 6,141 million (EUR 5,740 million). within the limits of the authority granted by the owner, The period-end equity ratio was 100 per cent (100 per cent) decides on share purchases and disposals, and confirms the and liquidity was excellent, taking into account the liquid principles of risk management. The charter contains procedural assets of EUR 358 million, the EUR 300 million revolving guidelines for meeting preparations, documentation and credit facility and the EUR 300 million commercial paper regularly handled matters. The Board has not set up any programme. Solidium entered into a EUR 300 million unsecured committees. revolving credit facility agreement on 30 November 2009. Solidium Oy complies with the Corporate Governance The facility is a committed credit line for general corporate Code for Finnish listed companies, with certain exceptions purposes and is a back-up facility for the commercial paper due to the nature of the company’s business and ownership programme. The facility is a one-year arrangement with a structure. one-year extension option subject to agreements between the parties. The size of Solidium’s commercial paper programme pErSONNEL was at the same time increased from EUR 100 million to The Managing Director of Solidium is Kari Järvinen, MSc (Eng), EUR 300 million. The programme permits the company to MBA (b. 1962). The Managing Director does not own any issue commercial papers with a maturity of less than one year. company shares or options. The salaries (including fringe These financing arrangements will enable the company to benefits) paid to the Managing Director was EUR 338,820 ensure, in line with its treasury policy, that it has sufficient (EUR 53,316) and the performance bonuses paid were EUR financial instruments at its disposal for its potential capital 26,500 (0), in total EUR 365,520 (53,316) during the financial requirements. The capital structure of Solidium may be period. The performance bonuses of the Managing Director complemented by other financial instruments in the future. At for the period were EUR 47,500 (26,500), which will be paid the end of the financial period on 30 June 2010, the revolving after the financial period-end. The Managing Director has a credit facility was unused and there were no commercial defined-contribution supplementary pension and may retire papers outstanding. at the age of 63. The supplementary pension is equivalent to The Annual General Meeting of Solidium was held in 30.3 per cent of the Managing Director’s annual remuneration. Helsinki on 30 October 2009. The Annual General Meeting The expenses of the supplementary pension amounted to EUR adopted the company’s financial statements for the financial 124,084 (EUR 32,268), of which EUR 7,029 was related to the period 1 May to 30 June 2009 and discharged the members previous financial period. The Managing Director has a of the Board of Directors and the Managing Director from 9-month period of notice and is entitled to a severance liability. The General Meeting resolved, in accordance with payment equal to the total salary for 12 months. the proposal of the Board, that no dividend be paid for the Solidium had an average of 11 permanent employees in the financial period. The members of the Board of Directors and financial period and 11 permanent employees at the end of the their remuneration were confirmed. The firm of authorised period. public accountants KPMG Oy Ab, with APA Sixten Nyman as the principal auditor, was appointed as the company’s auditor ASSESSMENT OF KEY rISKS AND to serve for a term ending at the end of the next Annual SOUrCES OF UNCErTAINTY General Meeting. The Annual General Meeting resolved to The key strategic risks and business risks related to Solidium’s remunerate the auditors in accordance with their invoice. operations consist of volatility in market values, which significantly influence changes in the values of the company’s invest- bOArD OF DIrECTOrS ments and the company’s profits, the availability of financing The Board of Directors consists of the Chairman, Keijo Suila and the achievement of long-term business objectives. Strate- (b. 1945) and the Vice Chairman, Eija Ailasmaa (b. 1950), as gic and business risks may also arise from the selection of a well as members Jouni Hakala (b. 1961), Antti Herlin (b. 1956), wrong strategy, from deficient management and monitoring, Lauri Ihalainen (b. 1947), Marketta Kokkonen (b. 1946), and or from slow reaction to changes taking place in the market Anni Vepsäläinen (b. 1963). All of the Board members are situation and the operating environment. independent of the company and the shareholder. The Board The most significant business risks affecting the company’s members do not hold company shares, and the company has operations consist of equity, interest rate, currency and not adopted any option schemes. liquidity risks related to investment operations. These market- The monthly salary of the Board’s Chairman is EUR 5,500, related risks may have a significant impact on the company’s that of the Vice Chairman is EUR 3,000, and that of the profits and the values of the shares owned by the company as regular members is EUR 2,500, in addition to which a meeting a result of changes in market prices (interest rates, currency

46 FINANCIAL REPORTING

exchange rates, share prices, credit risk margins) or changes prOpOSED DIVIDEND in price fluctuations. As a general rule, the company does The distributable unrestricted equity detailed in the financial not hedge its equity investments with derivatives or other statements totals EUR 5,805,316,109 including EUR instruments. 397,317,540 in profit for the financial period. The Board of The key operational risks are related to deficiencies or Directors proposes that a dividend of EUR 178,000 per share, errors in the functioning of internal processes and systems, or a total of EUR 356,000,000, be paid for the financial actions of persons or events external to the company, which period. The proposed dividend is equivalent to the distributed may cause direct or indirect losses to the company. cash profits received by Solidium from its portfolio companies The company may experience direct or indirect losses due during the financial period. to a counterparty risk, i.e. due to the fact that the company’s contractual parties are not able to fulfil their agreed obliga- EVENTS AFTEr THE FINANCIAL pErIOD tions and the collateral received does not cover the company’s No significant events have taken place in the company’s opera- receivables. The counterparty risk also includes the country tions since the end of the financial period. and clearing risk. OUTLOOK INTErNAL CONTrOL AND rISK MANAGEMENT Dividend income and gains from possible disposals make up The principles of the company’s internal control and risk the majority of Solidium’s profits. Solidium’s dividend income management are further detailed in the Corporate Governance is expected to be on the same level as or to increase slightly section on pages 38–41 of the Annual Report. over the financial period 1 July 2009–30 June 2010, when dividend income amounted to EUR 299 million, excluding dividend received in the form of Tikkurila shares.

SOLIDIUM OY’S KEY FIGUrES

1.7.2009–30.6.2010 1.5.2009–30.6.2009 Operating profit, EUR million -3.7 -1.1 Profit before taxes, EUR million 397.3 -0.7 Profit for the period, EUR million 397.3 -0.7 Return on equity, % 6.7 0.0 Return on investment, % 6.7 0.0 Return on investment at fair values, % 34.6 1.1 Management cost ratio, % 0.05 0.11 Shareholders’ equity, EUR million 6 136.8 5 739.5 Net asset value, EUR million 7 714.8 6 041.6 Interest-bearing liabilities, EUR million 0.0 0.0 Equity ratio, % 99.9 100.0 Proposed dividend, EUR million 356.0 0 Average number of employees 11 7

CALCULATION OF KEY FIGUrES

Profit for the period Return on equity = Shareholders’ equity (average of opening and closing balance)

Pre-tax profit + interest expenses and other financial expenses Return on investment = Balance sheet total – non-interest-bearing liabilities (average of opening and closing balance)

Personnel expenses + depreciations and impairments + other operating expenses Management cost ratio = Net asset value (average of opening and closing balance)

Net asset value = Assets – liabilities Publicly listed instruments and investment funds have been valued at their last trading price, taking into account deferred tax liabilities, and other balance sheet items have been valued at their carrying amount.

Shareholders’ equity Equity ratio = Balance sheet total – prepayments received

47 | ANNUAL REPORT 2010

Income statement

EUR Note 1.7.2009–30.6.2010 1.5.2009–30.6.2009

TURNOVER 0 0

Other operating income 78 0

Personnel expenses 1 -2 050 851 -312 499 Depreciation and impairment -93 764 -534 Other operating expenses 2 -1 520 999 -748 890

OPERATING PROFIT (LOSS) -3 665 535 -1 061 923

Financial income and expenses 3 400 983 075 400 856

PROFIT (LOSS) BEFORE TAX 397 317 540 -661 067

Income tax 0 0

PROFIT (LOSS) FOR THE PERIOD 397 317 540 -661 067 balance sheet

EUR Note 30.6.2010 30.6.2009

ASSETS NON-CURRENT ASSETS Intangible assets 4 88 251 4 101 Tangible assets 5 244 904 9 022 Investments 6 5 782 073 131 5 587 030 041 TOTAL NON-CURRENT ASSETS 5 782 406 286 5 587 043 164

CURRENT ASSETS Current receivables 7 690 229 359 589 Financial securities 8 317 897 065 75 021 355 Cash and cash equivalents 39 635 835 77 673 259 TOTAL CURRENT ASSETS 358 223 128 153 054 202

TOTAL ASSETS 6 140 629 414 5 740 097 366

EQUITY AND LIABILITIES SHAREHOLDERS’ EQUITY 9 Share capital 331 500 000 331 500 000 Reserve for invested non-restricted equity 5 124 639 966 5 124 639 966 Retained profit (loss) 283 358 603 284 019 671 Profit (loss) for the period 397 317 540 -661 067 TOTAL SHAREHOLDERS’ EQUITY 6 136 816 109 5 739 498 570

LIABILITIES Current liabilities 10 3 813 305 598 796

TOTAL EQUITY AND LIABILITIES 6 140 629 414 5 740 097 366

48 FINANCIAL REPORTING

Cash flow statement

EUR 1.7.2009–30.6.2010 1.5.2009–30.6.2009

Cash flow from operating activities Operating profit -3 665 535 -1 061 923 Adjustments to operating profit 93 685 534 Dividends and capital repayments received 356 119 249 0 Other financial items -38 791 400 856 Tax 0 0 352 508 608 -660 534

Change in working capital Current receivables: increase (–) / decrease (+) -330 641 149 216 Non-interest-bearing current liabilities: increase (+) / decrease (–) 3 214 509 115 594 2 883 868 264 810

Cash flow from operating activities 355 392 476 -395 724

Cash flow from investing activities Investments in tangible and intangible assets -413 797 -4 242 Investments in shares -150 141 693 -81 166 838 Gains on sale of shares 1 298 0

Cash flow from investing activities -150 554 191 -81 171 080

Cash flow from financing activities Current loans: raised (+) / repaid (–) 0 -50 714 500

Cash flow for the period 204 838 285 -132 281 304

Liquid funds at the start of the financial period 152 694 614 284 975 918 Liquid funds at the end of the financial period 357 532 899 152 694 614 Change in liquid funds 204 838 285 -132 281 304

Liquid funds in the cash flow statement include receivables from banks, commercial papers, certificates of deposit, and units in mutual funds that invest in corresponding financial instruments.

49 | ANNUAL REPORT 2010 Notes to the financial statements

The financial statements of Solidium Oy have been prepared Valuation of current assets in compliance with the Finnish Accounting Act, Accounting Current assets are measured at the estimated recoverable Ordinance, and Companies Act. amount. Solidium Oy is domiciled in Helsinki. Copies of Solidium Financial securities are measured at the lower of the cost Oy’s financial statements are available at the company’s office of acquisition and market value. at Unioninkatu 32 B, 00100 Helsinki. Receivables and liabilities denominated in foreign curren- cies have been measured at the average rate for the balance prINCIpLES OF VALUATION sheet date as confirmed by the European Central Bank.

Valuation of non-current assets pENSIONS Tangible and intangible assets are measured at the cost of Pensions are recognised in the income statement in the finan- acquisition less accumulated depreciation. Planned depreciation cial period to which they apply. The pension provisions for the of machinery and equipment corresponds to 25%, the maximum company’s personnel are arranged through statutory TyEL amount from the residual value as regulated in the tax insurance. The Managing Director has a defined-contribution legislation. Intangible assets are depreciated on a straight-line supplementary pension. basis over 4–5 years. Investments in non-current assets are recognised in the TAX balance sheet at cost of acquisition. Permanent impairment The tax expense item in the income statement consists of is deducted from the cost of acquisition. current tax. It is calculated on the basis of the Finnish tax rate and adjusted for any taxes related to previous financial periods.

Notes to the income statement EUR 1.7.2009–30.6.2010 1.5.2009–30.6.2009

1 Personnel expenses Wages and salaries 1 611 854 240 420 Pension costs 389 354 29 742 Other personnel expenses 49 644 42 338 Total 2 050 851 312 499

The Managing Director was paid a salary (including fringe benefits) of EUR 338,820 (EUR 53,316) and a performance bonus of EUR 26,500 (EUR 0). The performance bonus for the period was EUR 47,500 (EUR 26,500), which is paid after the period-end. The costs of the Managing Director’s defined-contribution supplementary pension amounted to EUR 124,084 (EUR 32,268), of which EUR 7,029 was related to the previous financial period. In the previous financial period, 50% of the performance bonus and defined-contribution pension costs were related to the preceding financial period.

The 4 persons belonging to the Management Team (excluding the Managing Director) were paid a total of EUR 417,138 in salaries (including fringe benefits). Performance bonuses paid to these 4 persons totalled EUR 115,000.

The Board of Directors received EUR 303,000 (EUR 51,700) in monthly and meeting fees.

Average number of employees 11 7 Employees at period end 11 10

50 FINANCIAL REPORTING

EUR 1.7.2009–30.6.2010 1.5.2009–30.6.2009

2 Other operating expenses Administration costs 1 057 091 677 891 Costs for facilities 207 915 20 296 Other 255 993 50 703 Total 1 520 999 748 890

Fees paid to authorised public accountants Audit 17 910 0 Tax consultation 32 500 0 Other services 191 833 0 Total 242 243 0

3 Financial income and expenses Income from other non-current asset investments 401 021 866 0 Other interest and financial income 894 190 435 941 Interest and other financial expenses -932 981 -35 086 Total financial income and expenses 400 983 075 400 856

Notes to the balance sheet EUR 1.7.2009–30.6.2010 1.5.2009–30.6.2009

4 Intangible assets Intangible rights Cost of acquisition at the start of the financial period 4 242 0 Additions 27 328 4 242 Cost of acquisition at the end of the financial period 31 570 4 242 Accumulated depreciation at the start of the financial period 141 0 Depreciation for the period 1 418 141 Accumulated depreciation at the end of the financial period 1 559 141 Disposals 0 0 Carrying amount at the end of the financial period 30 011 4 101

Other non-current assets Cost of acquisition at the start of the financial period 0 0 Additions 72 801 0 Cost of acquisition at the end of the financial period 72 801 0 Accumulated depreciation at the start of the financial period 0 0 Depreciation for the period 14 560 0 Accumulated depreciation at the end of the financial period 14 560 0 Disposals 0 0 Carrying amount at the end of the financial period 58 240 0 Total intangible assets 88 252 4 101

51 | ANNUAL REPORT 2010

Notes to the balance sheet EUR 1.7.2009–30.6.2010 1.5.2009–30.6.2009

5 Tangible assets Machinery and equipment Cost of acquisition at the start of the financial period 9 414 9 414 Additions 302 121 0 Cost of acquisition at the end of the financial period 311 535 9 414 Accumulated depreciation at the start of the financial period 392 0 Depreciation for the period 77 786 392 Accumulated depreciation at the end of the financial period 78 178 392 Disposals 0 0 Carrying amount at the end of the financial period 233 357 9 022

Other tangible assets Cost of acquisition at the start of the financial period 0 0 Additions 11 547 0 Cost of acquisition at the end of the financial period 11 547 0 Accumulated depreciation at the start of the financial period 0 0 Depreciation for the period 0 0 Accumulated depreciation at the end of the financial period 0 0 Disposals 0 0 Carrying amount at the end of the financial period 11 547 0

Total tangible assets 244 904 9 022

6 Investments Other shares and equity at the start of the financial period 5 587 030 041 5 332 358 163 Additions 252 431 225 254 671 878 Disposals -57 388 135 0 Other shares and equity at the end of the financial period 5 782 073 131 5 587 030 041

Cost of acquisition Market value Share Number of shares Holding on 30 June 2010 on 30 June 2010 Elisa 16 631 000 10.0% 161 346 150 236 492 820 Kemira 25 896 087 16.7% 163 441 479 228 403 487 Metso 15 695 287 10.4% 140 328 422 416 239 011 Outokumpu 56 440 597 30.9% 455 881 990 701 556 621 Rautaruukki K 55 656 599 39.7% 679 130 726 668 992 320 Sampo A 79 280 080 14.1% 1 063 241 009 1 377 094 990 Sponda 95 163 745 34.3% 171 926 628 236 006 088 Stora Enso A 55 595 937 31.4% * 322 574 298 341 915 013 Stora Enso R 41 483 501 6.8% * 231 419 859 247 863 918 TeliaSonera 616 128 221 13.7% 2 174 932 620 3 259 318 289 Tieto 7 415 418 10.3% 115 560 419 100 849 685 Tikkurila 6 474 021 14.7% 102 289 532 99 699 923 Total 5 782 073 131 7 914 432 165 * Solidium Oy’s holding of all of Stora Enso Oyj’s shares is 12.3% and of all votes 25.1%.

52 FINANCIAL REPORTING

EUR 1.7.2009–30.6.2010 1.5.2009–30.6.2009

7 Current receivables Other receivables 0 3 380 Prepayments and accrued income 690 229 356 209 Total 690 229 359 589 Material accruals included in prepayments and accrued income are related to the fees of the revolving credit facility agreement, staff-related expenses and interest income from liquid funds.

8 Financial securities Fair value 318 087 092 75 121 278 Book value 317 897 065 75 021 355 Difference 190 027 99 923

9 Shareholders’ equity Restricted shareholders’ equity Share capital at the start of the financial period 331 500 000 331 500 000 Addition 0 0 Share capital at the end of the financial period 331 500 000 331 500 000 Total restricted shareholders’ equity 331 500 000 331 500 000 Solidium Oy has 2,000 shares. The shares have no nominal value.

Non-restricted shareholders’ equity Reserve for invested non-restricted equity at the start of the financial period 5 124 639 966 4 951 134 926 Addition 0 173 505 040 Reserve for invested non-restricted equity at the end of the financial period 5 124 639 966 5 124 639 966 Retained profit 283 358 603 284 019 671 Profit for the period 397 317 540 -661 067 Total non-restricted shareholders’ equity 5 805 316 109 5 407 998 570

Total shareholders’ equity 6 136 816 109 5 739 498 570

10 Current liabilities Trade payables 66 783 327 266 Other liabilities 3 049 947 40 633 Accrued liabilities 696 575 230 897 Total 3 813 305 598 796 Accruals included in accrued liabilities are related to personnel expenses and the fees of the revolving credit facility agreement.

11 Other commitments

The company operates in leased facilities. Future minimum lease expenses under lease contracts that cannot be dissolved are distributed as follows:

Within 12 months 229 925 178 169 After 12 months but within five years 744 886 810 427 After five years 0 17 361 Total 974 812 1 005 958

Following the demerger of the predecessor company, also called Solidium Oy, the company has a joint commitment with Governia Oy. The commitment is based on the statute in Chapter 17, Section 16 of the Companies Act.

53 | ANNUAL REPORT 2010 proposal for the distribution of profit

The distributable non-restricted shareholders’ equity recognised in the financial statements totals EUR 5,805,316,109. No material changes have taken place in the company’s financial situation since the end of the financial period and, in the view of the Board of Directors, the proposed dividend does not endanger the company’s ability to fulfill its obligations.

The Board of Directors proposes to the General Meeting that the distributable non-restricted shareholders’ equity be allocated as follows: – EUR 178,000 per share distributed as dividend for 2,000 shares 356 000 000 – amount retained in non-restricted shareholders’ equity 5 449 316 109 5 805 316 109

If the Board’s proposal is approved, the shareholders’ equity of Solidium Oy shall consist of the following: – share capital 331 500 000 – reserve for invested non-restricted equity 5 124 639 966 – retained earnings 324 676 143 5 780 816 109

Signatures for the report of the board of Directors and the Financial Statements

Helsinki, 13 August 2010

Keijo Suila Eija Ailasmaa Jouni Hakala Antti Herlin Chairman Vice Chairman

Lauri Ihalainen Marketta Kokkonen Anni Vepsäläinen

Kari Järvinen Managing Director

Auditor’s note

Our auditor’s report has been issued today on the audit performed.

Helsinki, 16 August 2010

KPMG Oy Ab

Sixten Nyman Authorised Public Accountant

54 AUDITOR’S REPORT

Auditor’s report

TO THE ANNUAL GENErAL MEETING OF SOLIDIUM OY assessments, the auditor considers internal control relevant to We have audited the accounting records, the financial state- the entity’s preparation and fair presentation of the financial ments, the report of the Board of Directors, and the adminis- statements and the report of the Board of Directors in order tration of Solidium Oy for the period of 1.7.2009–30.6.2010. to design audit procedures that are appropriate in the circum- The financial statements comprise the balance sheet, the stances. An audit also includes evaluating the appropriateness income statement, the cash flow statement and notes to of accounting policies used and the reasonableness of the financial statements. accounting estimates made by management, as well as evaluating the overall presentation of the financial statements The responsibility of the board of Directors and and the report of the Board of Directors. the Managing Director The audit was performed in accordance with good auditing The Board of Directors and the Managing Director are respon- practice in Finland. We believe that the audit evidence we sible for the preparation and fair presentation of the financial have obtained is sufficient and appropriate to provide a basis statements and the report of the Board of Directors in accord- for our audit opinion. ance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Opinion on the Company’s Financial Statements and Directors in Finland. The Board of Directors is responsible for the report of the board of Directors the appropriate arrangement of the control of the company’s In our opinion, the financial statements and the report of the accounts and finances, and the Managing Director shall see Board of Directors give a true and fair view of the financial to it that the accounts of the company are in compliance with performance and financial position of the company in accord- the law and that its financial affairs have been arranged in a ance with the laws and regulations governing the preparation reliable manner. of the financial statements and the report of the Board of Directors in Finland. The information in the report of the Auditor’s responsibility Board of Directors is consistent with the information in the Our responsibility is to perform an audit in accordance with financial statements. good auditing practice in Finland, and to express an opinion on these financial statements and on the report of the Board of Opinion on discharge from liability and Directors based on our audit. Good auditing practice requires distribution of profit that we comply with ethical requirements and plan and perform We support that the financial statements should be adopted. the audit to obtain reasonable assurance whether the financial The proposal by the Board of Directors regarding the use of statements or the report of the Board of Directors are free the profit shown at the balance sheet is in compliance with from material misstatement and whether the members of the the Limited Liability Companies Act. We support that the Board of Directors and the Managing Director have complied Members of the Board of Directors and the Managing Director with the Limited Liability Companies Act. should be discharged from liability for the financial period An audit involves performing procedures to obtain audit audited by us. evidence about the amounts and disclosures in the financial statements and the report of the Board of Directors. The Helsinki, 16 August 2010 procedures selected depend on the auditor’s judgment, KPMG OY AB including the assessment of the risks of material misstatement of the financial statements or of the report of the Board of Sixten Nyman Directors, whether due to fraud or error. In making those risk Authorized Public Accountant

This document is an English translation of the Finnish auditor’s report. Only the Finnish version of the report is legally binding.

55 | ANNUAL REPORT 2010

Sources and comments

The key indicators for Solidium’s portfolio have been calculated by Suomen Sijoitustutkimus Oy, an independent, external service provider. The key indicators of Solidium’s portfolio companies presented in this Annual Report, related to full accounting periods, have been calculated by Solidium. The calculations are based on information published by the companies, such as annual reports, releases and company websites, or on other publicly available information about the companies and their industry. Quarterly or half-year indicators are those released by the companies, because the notes to quarterly financial statements available are not sufficient for calculation of all key ratios. Solidium analyses the financial information about companies in which it has holdings in compliance with generally accepted accounting principles. Key indicators for companies often involve choices made on items to be included in the calculation. Solidium aims to follow a standardised analysis procedure for all of its portfolio companies and assesses the nature of the companies’ cash flow independently. Owing to these interpretations, the key indicators may differ from those presented by the companies. With regards to texts and tables concerning the distribution of profit, it must be taken into consideration that Solidium was established through a demerger on 1 May 2009, after which all distributable profits have been paid to Solidium. The profits distributed for the 2008 accounting period for shares transferred to Solidium were paid to the predecessor company Solidium Oy, which was dissolved on 1 May 2009 (excluding distribution from Elisa, which was under direct government ownership in spring 2009 and which paid its dividend in spring 2009 to the State of Finland). Information for the tables concerning the companies’ largest shareholders has been obtained from the shareholder lists published by the companies as well as their flagging notifications concerning shareholders that have exceeded the 5 per cent ownership threshold (and have not announced that their ownership has declined below this threshold). In the shareholder tables, the name “Varma” refers to Varma Mutual Pension Insurance Company, “Ilmarinen” to Ilmarinen Mutual Pension Insurance Company and “Kaleva” to Kaleva Mutual Insurance Company.

Solidium Oy Unioninkatu 32 B I P.O. Box 1148 I 00101 Helsinki tel. +358 10 830 8900 I fax +358 10 830 8929 Business ID: 2245475-9 I www.solidium.ﬁ